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Home My WebLink AboutJuly 22, 2002 RegularCITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at: wwmci, columbia-heights, mn. us ADMINISTRATION July 19, 2002 Ma~or Gary L. Peterson Councilmembers Marlaine Szurek Julienne Wyckoff Bruce Nawrocla' Robert .4. Williams City Manager Walter R. Fehst The following is the agenda for the regular meeting of the City Council to be held at 7:00 p.m. on Monday, July 22, 2002 in the City Council Chambers, City Hall, 590 40th Avenue N.E., Columbia Heights, Minnesota. employment in, its services, programs, or activities. Upon request, accommodation will be provided to allow individuals with disabilities to participate in all City of Columbia Heights' services, programs, and activities. Auxiliary aids for disabled persons are available upon request when the request is made at least 96 hoUrs in advance. Please call the Deputy City Clerk at 763-706-3611, to make arrangements. (TDD/706-3692 for deaf or hearing impaired only) Introduction by Pastor Dave Briley, Oak Hill Baptist Church Invocation: Pastor Leverty, Ireland 1. CALL TO ORDER/ROLL CALl. 2. PLEDGE OF ALLEGIANCE ADDITIONS/DELETIONS TO MEETING AGENDA (The Council, upon majority vote of its members, may make additions and deletions to the agenda. These may be items brought to the attention of the Council under the Citizen Forum or items submitted after the agenda preparation deadline.) J PROCLAMATIONS~ PRESENTATIONS, RECOGNITIONS AND GUESTS A) Proclamations 1) 2002 National Night Out - Paul Bonesteel, Police Department B) Presentations 1) Invitation to the Police/Fire Appreciation Dance, July 26, 2002 Murzyn Hall - Ran Rittmiller C) Introduction of New Employees - none D) Recognition 1) Donations to Columbia Heights Fireworks Show a) Th-City American Legion b) Columbia Heights VFW Post 230 c) The Kordiak Company d) Northeast Bank e) First Community Credit Union f) Columbia Heights Lions Club 2) Donation to Murzyn Hall Flag Pole Lighting a) Columbia Heights VFW Post 230 THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT or THE PROVISION Of SERVICES EQUAL OPPOrTUnITY EMPLOYER city Louncn Agenaa July 22, 2002 Page 2 of 4 CONSENT AGENDA (These items are considered to be routine by the City Council and will be enacted as part of the Consent Agenda by one motion. Items removed from consent agenda approval will be taken up as the next order of business.) A) MOTION: Move to approve the Consent Agenda items as follows: 1) Minutes for Approval MOTION: Move to approve the minutes of the July 8, 2002, regular City Council meeting as presented. 2) Establish Work Session Meeting Dates for Monday, August 5, 2002 and Monday, August 19, 200?. MOTION: Move to establish Work Session meeting dates for Monday, August 5, 2002, and Monday August 19, 2002, to begin at 7:00 p.m. in City Hall Conference Room 1. 3) Adopt Resolution No. 2002-47 being a Resolution designating elections judges for the 2000 Primary and General Elections MOTION: Move to waive the reading of Resolution No. 2002-47 there being ample copies available to the public. MOTION: Move to adopt Resolution No. 2002-47, being a Resolution designating elections judges for the 2002 Primary and General Elections. 4) Long Term Care Insurance MOTION: Move to offer benefit eligible employees the option of obtaining, at their expense, the Municipal Pool's long-term care insurance through CAN, through payroll deduction. 5) Adopt Resolution No. 2002-45, being a resolution establishing employer match to deferred compensation for Recreation Director MOTION: Move to waive the reading of the resolution, there being ample companies available to the public. MOTION: Move to adopt Resolution 2002-45, being a resolution establishing employer match to deferred compensation for Recreation Director. 6) Accept 2002-2003 Federal Law Enforcement Equipment Block Grant MOTION: Move to accept the 2002-2003 federal law enforcement block grant in the amount of $17,241, with a 10 percent match in the amount of $1,916 to come fi.om unexpended funds in the 2002 Police Department General Budget. 7) Authorization to purchase administrative vehicle MOTION: Move to authorize the purchase of one 2002 Ford Taurus from Superior Ford of Plymouth, Minnesota, with funding to come from the insurance payoff on squat 953 in the amount of $6,090 and the remainder from fund 431-42100-5150 in the amount of $9,551.66, including tax; and to authorize the Mayor and City Manager to enter into a contract for same. Llty Louncll ~genaa July 22, 2002 Page 3 of 4 8) Adopt Resolution 2002-44, being a Resolution approving a lot split of the property located at 2120 43rd Avenue NE MOTION: Move to waive the reading of Resolution 2002-44, there being ample copies available to the public. MOTION: Move to adopt Resolution 2002-44, a resolution approving a lot split of the property at 2120 43rd Avenue NE. 9) Approve Business License Applications MOTION: Move to approve the items as listed on the business license agenda for July 22, 2002 as presented. 10) Approve Payment of Bills MOTION: Move to approve payment of the bills out of the proper funds as listed in the attached check register covering Check Number 98963 through 99148 in the amount of $1,672,666.72. e PUBLIC HEARINGS A) Public Hearing called for Revocation/Suspension of Rental Housing License at 4610-4612 Fillmore Street MOTION: Move to Close the Public Hearing Regarding the Revocation or Suspension of the Rental License Held by Mohsen Dessouki Regarding Rental Property at 4610-4612 Fillmore Street in that the Property Owner has received a extension to complete the work on the outside of the building. B) Public Hearing called for Revocation/Suspension of Rental Housing License at 4637-4639 Pierce Street MOTION: Move to Close the Public Hearing Regarding the Revocation or Suspension of the Rental License Held by Russell Waletski Regarding Rental Property at 4637-4639 Pierce Street in that the Property Owner has received a extension to complete the work on the outside of the building. e ITEMS FOR CONSIDERATION A) Other Ordinances and Resolutions 1) Adopt Resolution 2002-48, granting the consent of the City to the transfer of control of the cable television franchise and cable television system fi:om AT&T Corporation to AT&T Comcast Corporation MOTION: Move to waive the reading of Resolution No. 2002-48, there being ample copies available to the public. B) MOTION: Move to adopt Resolution NO. 2002-48, a Resolution granting the consent of the City of Columbia Heights, MN to the Transfer of Control of the Cable Television Franchise and Cable Television System from AT&T Corporation to AT&T Comcast Corporation. Bid Considerations - none c) Other Business Financial Analysis Professional Services Contract MOTION: Move to authorize the Mayor and City Manager to enter into an agreement with Ehlers and Associates based on their proposal to evaluate the City's plan to relocate the City's liquor stores on Central and University Avenues. ALTERNATE MOTION: Move to authorize the Mayor and City Manager to enter into an agreement with Springsted based on their proposal of June 26, 2002 to evaluate the City's plan to relocate the Central Avenue Liquor operation. Ll[y councn ^genaa July 22, 2002 Page 4 of 4 Purchase of Property for Central Avenue Liquor Store MOTION: Move to authorize the Mayor and City Manager to enter into a contingency offer for the Central Avenue property based on the contingencies listed on the attached document. o Request for preliminary and final plat approval of Parkside Village, a 25 unit owner-occupied townhome subdivision on 51 st Avenue. MOTION: Move to approve the preliminary and final plat for Parkside Village, as the proposal is consistent with the City Subdivision Ordinance, and is consistent with the City Comprehensive Plan. MOTION: Move to approve the preliminary and final plat for Parkside Village, and all that identified on the plat submitted at 825 51st Avenue NE, subject to the following conditions: 1) City Engineer review and approval of Final Plat, and any changes deemed necessary. 2) Park dedication fees of $750.00 per unit, and that such fees be used to improve Sullivan Lake Park. 3) Fire Department review and approval of Final Plat, and any changes deemed necessary. 4) Development Agreement defining requirements and responsibilities of City and Developer. 5) Developer required to make a trail connection to the Medtronic and Sullivan Lake pathways. 8. ADMINISTRATIVE REPORTS A) Report of the City Manager 1) Upcoming Work Session Items B) Report of the City Attorney GENERAL COUNCIL COMMUNICATIONS A) Minutes of Boards and Commissions 1) Meeting of the Planning and Zoning Commission on July 9, 2002 2) Meeting of the Economic Development Authority on June 18, 2002 3) Special Meeting of the Charter Commission on May 23, 2002 4) Meeting of the Housing and Redevelopment Authority on April 16, 2002 10. CITIZENS FORUM (At this time, citizens have an opportunity to discuss with the Council items not on the regular agenda. Citizens are requested to limit their comments to five minutes. Please note the public may address the Council regarding specific agenda items at the time the item is being discussed.) 11. COUNCIL CORNER 12. ADJOURNMENT Walt~d~t~y~M~agt~e r WF/pvm OFFICIAL PROCEEDINGS CITY OF COLUMBIA HEIGHTS CITY COUNCIL MEETING JULY 8, 2002 THESE MINUTES HAVE BOT BEEN APPROX/ED... The following are the minutes for the regular meeting of the City Council held at 7:00 p.m. on Monday, July 8, 2002 in the City Council Chambers, City Hall, 590 40th Avenue N.E., Columbia Heights, Minnesota. Pastor Dan Thompson, Assembly of God Church led the invocation. CALL TO ORDER/ROLL CALl, Present: Mayor Peterson, Councilmember Williams, Councilmember Wyckoff, Councilmcmber Nawrocki. Absent: Councilmember Szurek. PLEDGE OF ALLEGIANCE ADDITIONS/DELETIONS TO MEETING AGENDA -none PROCLAMATIONS~ PRESENTATIONS~ RECOGNITIONS AND GUEST~ Proclamations -none Presentations Jennifer Bergman, Housing Resource Center Director of the Greater Metropolitan Housing Corporation, gave the company program background for assistance of affordable housing of low and moderate income level families. Three programs are provided which target loans for first time home - buyers and home improvements. The Housing Resource Center provides free housing services to all residents of participating communities. [Vyckoff questioned the program we currently have with CEE. Bob Streeter, Community Development Director, indicated they continue to do two programs for us. Berg-man listed what advise the company would give to residents regarding redevelopment of their home. Walt Fehst, City Manager, asked if there is a dollar limit on this program. Bergrnan stated the total limit for Columbia Heights is $40,000, with a maximum rebate per homeowner of $3,000. Bergman stated this is a non-profit organization. Fehst questioned the income level for home purchase. Bergman indicated the mission is service low to moderate income families. V~yckoff asked if the city pays anything. Fehst indicated the city has a contract with them on a yearly basis. Deb Johnson, 4638 Pierce Street, asked if there is a limitation on project improvement. Bergman stated that luxury improvements are ineligible. Introduction of New Employees - none Recognition - none CONSENT AGENDA Fehst took Conncilmembers through the consent agenda items. A) Motion by Nawrocki, second by W¥ckoff, to approve the Consent Agenda items as follows: 1) Minutes for Approval Motion to approve the minutes of the June 24, 2002, regular City Council meeting as presented. City Council Minutes July 8, 2002 Page 2 of 8 2) Establish hearing date of July 22 for Revocation or Suspension of a license to operate a rental property at 4610-4612 Fillmore Street and 4637-4639 Pierce Street NE. Motion to Establish a Hearing Date of July 22, 2002 for Revocation or Suspension of a License to Operate a Rental Property within the City of Columbia Heights against Mohsen Dessouki at 4610- 4612 Fillmore Street NE. Motion to Establish a Hearing Date of July 22, 2002 for Revocation or Suspension of a License to Operate a Rental Property within the City of Columbia Heights against Russell Waletski at 4637- 4639 Pierce Street NE. 3) Approve Payment of Bills Motion to approve payment of the bills out of the proper funds as listed in the attached check register covering Check Number 98731 through 98962 in the amount of $853,126.31. Upon vote: All ayes. Motion carried. PUBLIC HEARINGS Public Hearing called for Revocation/Suspension of Rental Housing License at 1300-1302, 1316-1318, and 1324-1326 Circle Terrace. Mayor Peterson closed the public hearing as the property owner is in the process of correcting all deficiencies on the property. ITEMS FOR CONSIDERATION Other Ordinances and Resolutions Adopt Emergency Ordinance #1449, being an Ordinance amending Ordinance #1428, Zoning and Development Ordinance 2001 imposing an emergency moratorium on the change in use of property within the industrial districts identified in the redevelopment study area for the City of Columbia Heights. Fehst indicated that the first priority of the City Council goal setting session was redevelopment of the industrial area. As a result, redevelopment specialists were interviewed and a recommendation wouM be made at the next council meeting. As the study is developed we may look at purchase of some sites, leading to speculation on the property. The concern, and request for this moratorium, is that current owners may look at long-term changes prior to this study. This moratorium will allow for the public good of future planning. Streeter indicated the moratorium would be for up to twelve months, with the thought that if the program begins the moratorium would be rescinded. He indicated that six months would be a reasonable amount of time for the process. This is the for the H and 12 General Industrial areas. Streeter indicated the properties that are included in the moratorium. Any action required would require Planning Commission approval or a building permit. Nawrocki pointed out the area not included next to California Street. Streeter indicated that this area is an individual potential redevelopment area and there is no specific reason for not including that area, but could be included at Council direction. Nawrocki asked if notice was sent to property owners. Streeter indicated this was published and owners would be informed when the Council decisions are make. Wyckoff asked if there are any current projects that this would affect. Streeter indicated there are no current building permits. Fehst indicated that he received only one call regarding a property split, City Council Minutes July 8, 2002 Page 3 of 8 and his explanation that purchase of property would not be affected Wyckoff asked that we work with these people, not against them. Wyckoff questioned the old Conoco station we own and what the zoning is. Streeter indicated that it is general business, and the moratorium would not apply to that area. Williams indicated that we are serious about developing this area and it would be a smart move by the City. Peterson stated that we want to work with the people in this area to be part of the redevelopment. Wyckoff felt this moratorium would help the property owners from spending money unnecessarily. Steve Johnson, 23450 Nightengale Street N}K, Andover and businessperson in Columbia Heights, asked if there are any single or multiple family homes in the area. Streeter indicated there are not. Pat Truchinski, 3859 Main Street, asked who would absorb the cost of soil condemnation removal. Streeter stated that we feel there may be such costs and there are public and private funds to help clean up the soil. Williams felt this property should have been worked on long ago and that these are the right steps to make. Motion by Nawrocki, second by Williams, to waive the reading of Emergency Ordinance #1449, there being ample copies available to the public. Upon vote: All ayes. Motion carried. Motion by Williams, second by Wyckoff, to adopt Emergency Ordinance #1449, being an Ordinance amending Ordinance #1428, Zoning and Development Ordinance 2001, imposing an emergency moratorium on the change in use of property within the industrial districts identified in the redevelopment study area for the City of Columbia Heights. Motion by Nawrocki to amend to include the industrial area along California Street (in section 6 of the moratorium to strike "the" and replace with "all" of the I1 and 12 General Industrial properties). Motion died for lack of a second. Upon vote of the original motion: Williams, aye; Wyckoff, aye; Nawrocki, aye; Peterson, aye. All ayes. Motion carried. EMERGENCY ORDINANCE NO. 1449 BEING AN EMERGENCY ORDINANCE AMENDING ORDINANCE NO. 1428, ZONING AND DEVELOPMENT ORDINANCE 2001 The City of Columbia Heights does ordain: Section 1: On May 29, 2001, the City of Columbia Heights adopted Ordinance 1428, which is an ordinance relating to and establishing a Zoning and Development plan and revised Zoning Map for the City of Columbia Heights; and, Section 2: Ordinance 1428 and subsequent amendments is officially known as the Columbia Heights Zoning and Development Ordinance; and, Section 3: The Columbia Heights Zoning and Development Ordinance divides the City into four residential districts, three business districts, and two industrial districts; and, Section 4: The two industrial districts are further classified in the Columbia Heights Zoning and Development Ordinance as I-1, Light Industrial District; and I-2, General Industrial District; and, City Council Minutes July 8, 2002 Page 4 of 8 Section 5: The City Council determines it is necessary to undertake a strategic master planning process to determine the highest and best use of industrial zoned properties, and, Section 6: In an effort to protect the strategic planning process, and the health, safety, and welfare of the public, the Columbia Heights City Council hereby imposes a moratorium on the I-1 Light and I-2 General Industrial zoned pr,o~perties within the area generally bounded by 3ra Street on the west, 40th Avenue on the north, Jackson Street on the east, and 37 Avenue on the south, in the City of Columbia Heights, effective immediately and terminating on July 8, 2003, and recognizing said time period may be shortened or extended by adoption of an Emergency Ordinance by the City Council. Section 7: Activities affected by this moratorium include anything in the industrial districts addressed above requiring action by the Planning and Zoning Commission, or building permits. This does not include building permits for maintenance issues such as roofs and/or siding. Section 8: This Ordinance shall be in full force and effect immediately. Date of Passage: July 8, 2002 Bid Considerations -none Other Business Approve Springsted Professional Services Contract Motion by Wyckoff, second by Williams, to authorize the Mayor and City Manager to enter into an agreement with Springsted for their proposal of June 26, 2002 to evaluate the City's plan to relocate the Central Avenue liquor operation. Nawrocki asked when Council authorized seeking these proposals. Fehst stated this proposal is based on discussions with Council to look for other liquor store sites. Nawrocki asked if we sought any other consultants. Fehst indicated that we did not, as on this particular item discussions have been with the Springsted Company. Nawrocki indicated his belief in getting other bids. He felt the timing was premature, with a cost is $7,500 to $1 O, 000. Nawrocki spoke against the motion. Fehst stated that the liquor store is an enterprise fund, which Mr. Thistle, a principal at Springsted, indicated the city would have to justify the success of the business to obtain bonds. Fehst indicated negatives of the current location. Nawrocki stated the study seems to be geared to a new location and bonding, and felt this was premature. Bill Elrite, Finance Director, indicated the proposal is not regarding sales, as our liquor store manager can do that. This is to research a stand-alone location versus renting, to get an evaluation on comparison sales, and look lightly at potential for increasing sales by moving. Williams felt we should include the University Store at the same time, as we have had a company looking at property since last year for both locations. Elrite stated that ideally we would like to move the store on Central, get it up and running and then look at the University location. Elrite indicated the problems at the University store. Williams stated the need to be more aggressive in our property search. Fehst indicated that other specific questions could be addressed. Fehst stated our success with liquor operations, but that we are not expert realtors. Wyckoff asked the amount paid for rent at the Central Avenue store. Elrite indicated it is over $100, 000. Wyckoff suggested closing the University store and building a better store on Central Avenue. Elrite indicated that he opposed this because of the revenue that would be lost. Elrite stated the newly implemented actions for increased security at the University Avenue store. Nawrocki indicated that citizens of this community voted for the city to be in and stay in the liquor business. Revenue also subsidizes costs of some city services. Nawrocki stated current and future City Council Minutes July 8, 2002 Page 5 of 8 financial needs of the City, and the projected cuts to cities by the State. He felt that current profits would be needed to provide city services, not to pay bonds. Nawrocki indicated that he is speaking against the study. Elrite stated this study would be to answer questions, including if we should stay in the current location. Discussion included the pros and cons of closing the University Avenue store. Fehst stated that the intentions are to see if this project could sustain itself and not deplete our resources. Fehst indicated that this is a small amount for research on a $6 million dollar corporation. Williams stated the need to keep our city moving forward. Peterson indicated that this is proactive and looks at our future. It may come back as not being a wise thing to do, but may force the Rainbow owners to be a better landlord. Peterson indicated that you must pursue possibilities to move forward. He shared concerns on the University store and concerns on State funds, but indicated that we should take care of ourselves, and this is an area that takes care of itself. Nawrocki stated that loss of liquor funds would affect taxes and city services, and put pressure on the property tax base. He indicated that we are currently working on too many items at once. Fehst stated that doing nothing is an option. Fehst indicated that staff is working on an additional acquisition on 40tn Avenue and redevelopment of the industrial site. Upon vote: Williams, aye: Wyckoff, nay; Nawrocki, nay; Peterson, aye. 2ayes - 2 nayes. Motion failed. Jim Hoeft, City Attorney stated that any member of council could bring this item up again, as there was no prevailing indication of the vote. Motion by Williams, second by Peterson, that this be brought up at another meeting for further discussion. Wyckoff asked residents to contact her with their opinions. Hoeft indicated that the property on 40th is moving forward as the contract directs. Nawrocki asked what would be built at the site. Peterson stated that we keep getting the opportunity to make the site better. Wyckoff stated that she voted in the negative because the site being looked at would be a larger building, not just a site for the liquor store. Upon vote: Williams, aye; Wyckoff, aye; Nawrocki, nay; Peterson, aye. 3 ayes - 1 nay. Motion carried. Adopt Resolution No.2002-46, being a Resolution authorizing the purchase of 4833 University Avenue Motion by Williams, second by Nawrocki, to waive the reading of Resolution No. 2002-46, there being ample copies available to the public. All ayes. Motion carried. Motion by Williams, second by Wyckoff, to Adopt Resolution No. 2002-46, being a Resolution authorizing the purchase of 4833 University Avenue; and furthermore, authorizing the Mayor and City Manager to enter into a contract for purchase of the property for $75,900, with funds to be appropriated from the Abatement Fund. City Council Minutes July 8, 2002 Page 6 of 8 Nawrocki asked where the authorization came from to place earnest money on the property. Fehst stated it is under the $3,000 amount he can authorize, and that he contacted council regarding their interest. Nawrocki questioned the problems with the property. Fehst stated the roof is damaged. This is a small property, and the hope wouM be to adjoin to the adjacent property. Nawrocki questioned the taxes on the property. Steve Johnson felt the tax amount is low and at approximately $60,000. Nawrocki indicated that the City has money in too many projects and not getting anything done. Fehst indicated the concern is to take care of blighted properties in the city. There is an abatement fund to deal with these properties, and that we may have to hold the property for a while before development. Peterson stated this is why the abatement fund was created. There is nothing hidden in this acquisition. Truchinski commented on the lot split he was involved in and that the money is a profit to the city. Wyckoff indicated that this purchase would stop a band-aid fix of the property. Wyckoff questioned the size of the lot. Steve Johnson stated it is not big enough for a liquor store. Steve Johnson stated before relocating or expanding any business, a study would be required before financing would be considered. Many private businesses spend funds to determine the feasibility of a new location and he felt this amount was not unreasonable. Upon vote: Williams, aye; Wyckoff, aye; Nawrocki, nay; Peterson, aye. 3 ayes - 1 nay. Motion carried. RESOLUTION 2002 - 46 BEING A RESOLUTION AUTItORIZING THE PURCHASE OF 4833 UNIVERSITY AVENUE N.E. WHEREAS, the City Council of the City of Columbia Heights (the "City) has an on-going Abatement Fund suitable for purchase of blighting influences within the City; and WHEREAS, the City has found that there exists conditions of deterioration, and substandard structure, in need of repairs which are in violation of the City Housing Code and City Ordinances or there exists a need (due to blighting influences) for intervention by the City to prevent further deterioration of the area; and WHEREAS, the City has an option to acquire such property pursuant to the Purchase Agreement by and between the City of Columbia Heights and Gilbert Hams (the "Seller") and such Purchase Agreement has been signed by the Seller and provided to the City Council. NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Columbia Heights that: 1. The City Council hereby approves the terms of the Purchase Agreement for 4833 University Avenue N.E. between the City of Columbia Heights and Gilbert Harris and authorizes the Mayor and the City Manager to sign the agreement on behalf of the City at a purchase price of $75,900 based on negotiations with the property owner. 2. The City Council hereby authorizes the City Manager to handle all the requirements and conditions in order for the City to complete the Ixansaction contemplated in the Purchase Agreement. 3. The City Council approves payment of the purchase cost from the City Abatement Fund. Passed this 8~ day of July 2002. ADMINISTRATIVE REPORTS Report of the City Manager Fehst referred to an article on the Jelly and Beans store on Central Avenue, and that Caribo Coffee may be looking to locate in our area. City Council Minutes July 8, 2002 Page 7 of 8 Upcoming Work Session Items · Long term care insurance presentation · Early replacement police administrative car · Request to accept federal equipment block grant with matching dollars. · Discuss limiting the time on review of council comer items. · Number of tenants in multiple housing units. · Liquor store discussion Wyckoff referred to complaints about properties not being kept up, such as one on Gould, and the possibility of requiring improvements. Fehst stated that grass on the property referred to has been ordered cut and will be cut again on a specific date in July. Wyckoff asked what the city could legally do to clean up these properties. Fehst referred to the housing maintenance code, and Public Works Department for grass complaints. Fehst indicated that we would arrange for regular grass cutting on abandoned property. Nawrocki stated that instead of immediately sending citations, to try sending a letter asking for cooperation from the property owner in a reasonable time; and then to use the citation process. Hoefi indicated that there are several steps before a citation gets to court. Fehst indicated the type of initial letter that goes out to residents, but stated that we are open to improvements. Report of the City Attorney -none GENERAL COUNCIL COMMUNICATIONS Minutes of Boards and Commissions · Meeting of the Telecommunications Commission on June 20, 2002 CITIZENS FORUM Harold Hoium, 4315, 4317, and 4321 5tn Street, requested the agenda packet include reports from the Mayor, Councilmembers, City Manager and each City Department. He stated that his house has been trashed. Fehst indicated that he would like to meet with Mr. Hoium and the Police Captain to discuss this. Hoium stated that he would like to keep his property clean, but permit costs are too high. Hoium became agitated and was asked to take his seat. Truchinski thanked the Council for what they are doing to improve the City. He complimented Mel Collova, Building Official, for the advice and help he has given him. Nawrocki stated that regarding Mr. Hoium's comments that a gentleman indicated he had contacted Nawrocki, that he had received a complaint regarding the Hoium property, but that the City Manager had indicated there was a meeting set for July 12th to discuss this and there was now a meeting set for tomorrow. NawrocM stated the concern was with the jungle appearance of the property. Deb Johnson, 4638 Pierce Street, questioned if police officers can be summoned to Council meetings at a moments notice, and if not, the Police Chief should always be present. Fehst stated that if there is a possible problem, the police are present, as one was tonight. Fehst stated he wouM pass along this concern. Fehst stated that he would meet with Mr. Hoium on Tuesday, July 9tn at 9:00 a.m. COUNCIL CORNER Nawrocki asked if signs could be put up around Sullivan Lake indicating pedestrian and bicycle paths. He stated there are still problems with graffiti. City Council Minutes July 8, 2002 Page 8 of 8 Nawrocki stated, "Practice what you preach, and actions speak louder than words ". Wyckoff thanked Jean Kuehn, Special Projects Coordinator, for placing recycling cans back at Huset and Prestemon Parks. She also suggested placing one at Keys Park. Williams asked everyone to pray for peace and prosperity for our city, and stated that we should keep moving forward in the city, as we have a lot of work to do. He stated, "By your works you will be justified and by your words you will be condemned". Peterson asked that citizens look inward to take care of their selves and their own property. If residents do not follow the rules, there would be an outside influence. Peterson stated, "Don't take ourselves too seriously, enjoy life, do a random act of kindness, and love your neighbor. ADJOURNMENT Mayor Peterson adjourned the meeting at 9:24 p.m. Patricia Muscovitz, Deputy City Clerk COLUMBIA HEIGHTS - CITY COUNCIL LETTER Meeting of: July 22, 2002 AGENDA SECTION: ORIGINATING DEPARTMENT: CITY MANAGERS NO: CITY MANAGER APPROVAL ITEM: Designating election judges BY: Patty Muscovitz BY: NO: DATE: 7-16-2002 DATE: Please find attached a list of elections judges for the year 2002 Primary Election to be held on Tuesday, September 10, and the General Election to be held on Tuesday, November 5. Recommended Motion: Move to waive the reading of Resolution No. 2002-47, there being ample copies available to the public. Recommended Motion: Move to adopt Resolution No. 2002-47 being a Resolution designating elections judges for the 2000 Primary and General Elections. COUNCIL ACTION: COLUMBIA HEIGHTS - CITY COUNCIL LETTER Meeting of: July 22, 2002 AGENDA SECTION: Consent ORIGINATING DEPARTMENT: CITY MANAGER'S NO: 5-A-2 CITY MANAGER' S APPROVAL Establish Work Session Meeting BY: Walt Fehst BY: ~.,~f~ ITEM: Dates for August 2002 DATE: July 16, 2002 DATE: NO: It is recommended that Work Session meeting dates be scheduled for Monday, August 5, 2002 and Monday, August 19, 2002, beginning at 7:00 p.m., in City Hall Conference Room 1. RECOMMENDED MOTION: MOTION: Move to establish Work Session meeting dates for Monday, August 5, 2002 and Monday August 19, 2002, beginning at 7:00 p.m., in City Hall Conference Room 1. COUNCIL ACTION: COLUMBIA HEIGHTS - CITY COUNCIL LETTER Meeting of: July 22, 2002 AGENDA SECTION: ORIGINATING DEPARTMENT: CITY MANAGERS NO: .S-- A -3 CITY MANAGER APPROVAL ITEM: Designating election judges BY: Patty Muscovitz NO: DATE: 7-16-2002 DATE: Please find attached a list of elections judges for the year 2002 Primary Election to be held on Tuesday, September 10, and the General Election to be held on Tuesday, November 5. Recommended Motion: Move to waive the reading of Resolution No. 2002-47, there being ample copies available to the public. Recommended Motion: Move to adopt Resolution No. 2002-47 being a Resolution designating elections judges for the 200~,Primary and General Elections. COUNCIL ACTION: RESOLUTION 2002-47 BEING A RESOLUTION DESIGNATING ELECTIONS JUDGES FOR THE 2002 PRIMARY AND GENERAL ELECTIONS WHEREAS: There are scheduled elections in the City of Columbia Heights and the State of Minnesota; and WHEREAS: Pursuant to City Charter, Section 30, and M.S.S.204A, the Council shall appoint qualified voters of each election district to be judges of election. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Columbia Heights does appoint the attached list of judges, by precinct, for the Primary and General Elections to be held on September 10, 2002 and November 5, 2002, respectively, with an hourly remuneration of $9.50 for head judge and $9.00 for an election judge. Passed this __ day of July, 2002. Offered by: Secondedby: Roll call: Mayor Gary L. Peterson Patricia Muscovitz, Deputy City Clerk 2002 ELECTION JUDGES FOR PRIMARY AND GENERAL Precinct l-Murzyn Hall HJ Faye Cleasby Charlotte Zarich Mona Lundholm Fran Jensen Wanda Heining Darlene Bieljeski Pauline Pafko Mildred Peterson Steve Emme Sandy Engquist 530 Mill St. Precinct 2-NEI College of Tech HJ Clara Shatmck Mark Emme Joann Kewatt Frances Fleisher Martin Heining Steve Iserman James McBroom Gerry Mrozka Alpha Geslin 825 41st Ave Precinct 3 -Parkview Villa 965 40th Avenue HJ Muriel Nichols Laura Lindahl Delores Jacobsen Ruth Hillestad Charles Helland Otto Lausten John Doan Lorraine Malisheski Patricia Klimek Barb Breen Precinct 4-Highland Elem School HJ Marsha Stroik Mavis Sibell Janis Larson Cliff Pelton Audrey Olund Mabel Jackson Judy Dettman Allison Rime H Jaque Block Marion Bernard Judy Schendel 1500 49th Avenue Precinct 5-First Lutheran Church 1555 40th Ave HJ Edna Miracle Mayme Lyons Pat Weber Nancy French Irene Ricci Dolores Roman Richard Meixner Sharon Ruettimann Lorfie Nalezny Gloria Helm Precinct 6-Hillhland Elem. School 1500 49th Ave HJ Judy Lee LaVonne Seim Barbara Elrod Delores Marquette Kay Mayer Eva Pelton Betty Doemer Doris Sunheim Marion Cellette Joanne Nelson Precinct 7-Valley View Elem School HJ Kay Handley Karin Mattson * Rose Corbett * Sylvia Weeks Jeanette LeBlanc Ann Kronstedt Joan Fuhrman William Burgoyne Gloria Helm Bill Balamut 800 49th Ave Precinct 8-Valley View Elem School 800 49th Ave HJ Pat $indra Mary Dowdle Noranda Anderson Ken Kronstedt Ruby Hawkins Dick Corbett Margaret (June) Riley James Davis Irene Sunt Carol White * Judges who will serve at Crestview Home voting. ** Part Time/On Call CITY COUNCIL LETTER Meeting of: July 22, 2002 AGENDA SECTION: CONSENT NO: ~ ~ - ~ ORIGINATING DEPARTMENT: CITY MANAGER' S · CITY MANAGER ' S APPROVAL ITEM: LONG-TERM CARE INSURANCE BY: LINDA L. MA~mm.~/~~ No.. DATE: 7-i6-0Ayfi? t' YDATE:: At the work session of July 15, 2002, Tom Ochs of Ochs, Inc. presented information on the Municipal Pool's long-term care insurance. This is an optional, enrollee paid, group long- term care insurance plan through CNA, available to all employees who are eligible for group benefits, as well as their spouses, parents, and grandparents (see attached). Based on the presentation and subsequent discussion, it is recommended that the City of Columbia Heights offer benefit eligible employees the option of obtaining, at their expense, the Municipal Pool's long-term care insurance through CNA, through payroll deduction. RECOMMENDED MOTION: Move to offer benefit eligible employees the option of obtaining, at their expense, the Municipal Pool's long-term care insurance through CNA, through payroll deduction. COUNCIL ACTION: Plan Summary The following is an overview of the group long-term care insurance plan. Please call toll-free: f-888-~2~-0686 or visit our webs#e: www. ltcbenefits, com (password: munipool) for additional rates and plan information. Eligibility All persons eligible for other employee benefits may enroll, as well as their spouses, retirees and their spouses, parents, parents-in-law, grandparents and grandparents-in- law. Spouses of employees, retirees and their spouses, parents, parents-in-law, grandparents and grandparents-in-law may enroll regardless of whether the employee enrolls and premiums are based on their age, not the employee's. Underwriting During the initial enrollment and at the time of hire, employees need only be actively at work on the effective date of coverage to qualify. No other questions will be asked. After the initial enrollment, employees must complete a short application form concerning medical history. At all times, spouses must complete a short application form and retirees and their spouses, parents, parents-in-law, grandparents and grandparents-in-law must complete a long form application. Cost Premiums are based on a person's age at the time the policy becomes effective. Enrollees can apply for a state tax credit of up to $100 per policy per year. Premium quotes are available up to age 90 upon request. Payment Employees and spouses will pay their premiums through payroll deduction. Retirees and their spouses, parents, parents-in-law, grandparents and grandparents-in-law may pay their premiums through direct billing or automatic bank draft. Portability An employee may continue coverage if he/she retires or othenvise leaves employment. The coverage and rates remain the same. Lifetime benefit maximum $100,000 $150,000 $146,000 $2~9,000 Nursing home daily maximum $801day $120/day $801day $1201day (3.4 years) ;, (3.4 ~earsI (5 yearst (5 years) Assisted living daily maximum $641day $961day $641day $961day (4.3 years) (4.3 years) (6.3 years) (6.3 y=,-rs) Home health care, home hospice $1,8001mo $2,7001mo $1,800/mo $2,700/mo care, adult day care and adult foster (4.6 years) (4.6 years) (6.8 years) (6.8 years) care monthl}/maximum Return of premium If an enrollee dies prior to age 65, 100% of premiums paid (minus benefits received) are returned to enrollee's estate. After age 65, the ~rcentage decreases by 10% each year until age 75. Inflation protection Opportunity to purchase additional coverage every 3 years so that value of coverage keeps pace with inflation. In addition to the four options featured above, the following options are available upon request: · A 5% inflation option that enables your benefit to automatically keep pace with inflation. · A non-forfeiture benefit option that guarantees some coverage if your policy lapses. Plan A 3.4 to 4.6 $t00,000 Max $801day <25 5.38 25 6.12 26 6.24 27 6.40 28 6.60 29 6.80 30 7.02 31 7.28 32 7.60 33 8.02 34 8.50 35 9.06 36 9.66 37 10.30 38 10.96 39 11.64 40 12.38 41 13.16 42 13.96 43 14.80 44 15.64 45 16.54 46 17.54 47 18.66 48 19.84 49 21.06 50 22.42 51 24.04 52 25.96 53 28.24 54 30.78 55 33.58 56 36.64 57 39.96 58 43.68 59 47.70 60 51.96 61 56.28 62 60.48 63 64.22 64 67.66 65 71.16 66 75.46 67 80.90 68 87.16 69 93.88 70 101.56 of covera~ $150,000 Max $120/day 8.08 9.20 9.34 9.60 9.90 10.22 10.52 10.92 11.40 12.02 12.74 13.58 14.48 15.44 16.44 17.46 18.54 19.72 20.94 22.18 23.46 24.80 26.30 27.98 29.76 31.60 33.62 36.04 38.94 42.38 46.16 50.34 59.94 65.52 71.56 77.94 84.42 90.72 101.50 106.76 113.18 121.34 130.74 140.82 152.34 Plan B 5 to $146,000 Max $801day 6.20 7.16 7.30 7.52 7.82 8.10 8.38 8.74 9.18 9.72 10.36 11.04 11.82 12.66 13.48 14.38 15.32 16.32 17.34 18.40 19.46 20.60 21.86 23.28 24.78 26.32 28.04 30.04 32.46 35.28 38.40 41.86 45.66 49.80 59.48 64.82 70.20 76.44 80.06 84.28 88.58 93.88 100.70 108.64 117.18 126.94 of covera ~e $219,000 Max $1201day The actual amount that will be deducted from each Paycheck will depend on the freqUency of your payroll c Premiums are per person and based on the individual's age on the effective date of coverage. AG-140662-A 9.3i 10.7, 10.94 11.28 11.72 12.14 12.58 13.10 13.76 14.58 15.52 16.58 17.74 19.00 20.24 21.58 22.98 24.48 26.02 27.60 29.20 30.90 32.78 34.94 37.16 39.48 42.04 45.06 48.70 52.92 57.60 62.80 68.48 74.70 81.66 89.22 97.22 105.30 113.16 120.10 126.40 132.88 140.82 151.06 162.94 175.78 190.40 06/01 Printed in USA CITY COUNCIL LETTER Meeting of: July 22, 2002 MANAGER'S NO: '----- CITY MANAGER ' S APPROVAL ITEM: BY: Walt F ehst, City BY: RESOLUTION.2002-45, ESTABLiSHiNG EMPLOYER MATCH TO DEFERRED Manager DATE: COMPENSATION FOR RECREATION DIRECTOR NO: DATE: 7 - 11 - 02 Effective January, 2002, the City Manager approved the employer match to deferred compensation for the position of Recreation Director at the same level as that for division heads under the Public Managers' Association Memorandum of Understanding ($1,000 for 2002; $1,250 for 2003). In the auditor's management report, it was noted that this amount exceeded that authorized by council resolution for department heads and supervisors ($300 for 2002 and $300 for 2003). It is the recommendation of the City Manager that the position of Recreation Director receive the same employer match to deferred compensation as the division heads under the Public Managers' Association, based on: 1) 2) Position reports directly to the City Manager, and Position reports information directly to a commission, and is responsible for making recommendations to the City Council, through the City Manager, for Recreation Department activities. RECOMMENDED MOTION: Move to waive the reading of the resolution, there being ample copies available to the public. RECOMMENDED MOTION: Move to adopt Resolution 2002-45, being a resolution establishing employer match to deferred compensation for Recreation Director. COUNCIL ACTION: RESOLUTION NO. 2002-45 RESOLUTION ESTABLISHING EMPLOYER MATCH TO DEFERRED COMPENSATION FOR RECREATION DIRECTOR and WHEREAS, the position of Recreation Director reports directly to the City Manager, WHEREAS, the position of Recreation Director reports information directly to a commission, and is responsible for making recommendations to the City Council, through the City Manager, for Recreation Department activities, and WHEREAS, it is the recommendation of the City Manager that the position of Recreation Director receive the same employer match to deferred compensation as the division heads under the Public Managers' Association. NOW, THEREFORE, be it resolved that the City Council of the City of Columbia Heights hereby establishes the same employer match for deferred compensation for the position of Recreation Director as the division heads under the Public Managers' Association. BE IT FURTHER RESOLVED THAT SUCH MATCH BE EFFECTIVE January, 2002. Passed this ~ day of ,2002. Offered by: Seconded by: Roll Call: Mayor Gary L. Peterson i Patricia Muscovitz, Deputy City Clerk CITY COUNCIL LETTER Meetin Iuly 22, 2002 AGENDA SECTION: Consent ORIGINATING DEPARTMENTCITY MANAGER 5'-A -to ?o ICE July , 00 BACKGROUND: The Columbia Heights Police Department has been granted an equipment block grant by the U.S. Department of Justice for $17,241. In order to accept this grant, the City must agree to a match of $1,916. The Police Department would like to use this money to pay for equipment we would normally not be able to afford. This would include miscellaneous training equipment, computer equipment, squad car equipment, officer safety equipment, etc. ANALYSIS/CONCLUSION: At the present time, it appears there would adequate funds available in the 2002 Police Department budget to cover the match. The grant will be available to us early in 2003. RECOMMENDED MOTION: Move to accept the 2002-2003 federal law enforcement block grant in the amount of$17,241, with a 10 per cent match in the amount orS 1,916 to come from unexpended funds in the 2002 Police Department General Budget. TMJ:mld 02-126 COUNCIL ACTION: Print Application Page 1 of 1 Application was submitted on June 30, 2002 12:44:16 AM EDT. LLEBG FY 2002 Application Date Certified: 30-JUN-02 IDate Submitted: 30-JUN-02 Jurisdiction Information MINNESOTA 10.592 Budget Information Eligible Award Amount: Final Award Amount: Match Amount: Matohlng Funds Deecriptlon: State and Local Government Units $17,241 $17,241 $1,916 CEO Information Title: Name Prefix: Last Name: Flint Name: Mayor Mr. Peterson Gary Addre#: Telephone: Fax: Email: 590 40th Ave. NE 763-706-3607 763-706-3601 Gary. Peterson~ci,columbia- Columbia Heights. MN 55421-3878 Ih eights.mn.us Program Contact Information Title: Name Prefix: Last Name: Firet Name: Police Chief Mr, Johnson Tom Address: Telephone: Fax: Emall: 590 40th Avenue Northeast 763-706-3755 763-706-3752 Tom.Johnson~ci,columbia- Columbia Heights, MN 55421-3878 heights.mn,us Application Details Date Agreed to Tnmt Fund Requirement: Applicant i~ PSOHB Compliant: 30-JUN-02 Yes Date Agreed to SPOC Requirement: Date Agreed to SAA Review Requirement: 30-JUN-02 30-JUN-02 Date Agreed to Certifications: Date Agreed to Assurances: 30-JUN-02 30-JUN-02 https://grants.oj p~usd~j~g~v:8~4~gms-user/p~sq~/~ebg-main~app-read-~n~y?p-bgid=4&p-acti~n=print 6/29/02 From: To: Date: Subject: <ojp@ojp.usdoj.gov> <Tom.Johnson@ci.columbia-heights.m n.us> 7/2/02 7:28AM FY 2002 LLEBG Application (13534) Approved. Your Application for the FY 2002 LLEBG Program has been approved by the Bureau of Justice Assistance (BJA).You will be notified via email when your official award documents are posted and are ready for you to accept on-line through this system. (Please Note: if you respond to this email do not change the subject line, thank you) CITY COUNCIL LETTER Meeting of July 22, 2002 AGENDA SECTION: Consent ORIGINATING DEPARTMENT CITY MANAGER NO. __~'/~ ~"] POLICE APPROVAL: _ ITEM: Authorization to purchase administrative BY: Thomas M. Johnson~ BY: NO. Vehicle DATE: July 2, 2002 o~' [J DATE: BACKGROUND: Due to a property damage only accident where the Police Chief's vehicle was struck from the rear on May 31, 2002, the department is in need of replacing an administrative vehicle. The department has checked the State of Minnesota contracts and has found they all expire June 30, 2002. The Chief has called many of the contract dealers and have found that contract price cars are not available, but locate cars are at a substantial cost increase over the contract bid cars. The best price that the Chief could find was through Superior Ford for a 2002 Ford Taurus. 2002 Ford Taurus: 4-door, base price Plus Sales tax 6.5% $14,687.00 954.66 $15,641.66 Grand Total $15,641.66 ANALYSIS/CONCLUSION: The City received $6,090 as a payoff from the insurance company on the totaled 1995 Chevrolet Lumina unit 953 (this car was scheduled for replacement in 2003). In talking to the Finance Director, there are funds in the Capital Equipment Fund g431 that would allow us to do an early replacement of this vehicle. This would require an expenditure of $9,551.66 from the fund. It is our recommendation to the Council that an early replacement of unit 953 take place; and that the Council authorize the purchase of one 2002 Ford Taurus from Superior Ford of Plymouth, Minnesota. RECOMMENDED MOTION: Move to authorize the purchase of one 2002 Ford Taurus from Superior Ford of Plymouth, Minnesota, with funding to come from the insurance payoff on squad 953 in the amount of $6,090 and the remainder from fund 431-42100-5150 in the amount of $9,551.66, including tax; and that Mayor and City Manager are authorized to enter into a contract for same. TMJ:mld 02-127 COUNCIL ACTION: 3UM 18 2002 16:18 SUPERIOR FORD FLEET 7635196336 p. 1 U RI R ' " FLEET,& GOVERNMENT SALES DEPARTMENT 9700 56TH AVE NO - PLYMOUTH, RN TO: J<:::;~'; k-"/~ ~g',::),,'~/' OF' PAGES SENT MAIN NUMBER 763-559-gl 11 FAX NUMBER 763-51g-$336 BILL STUART 763-519-$349 CAROL HENDRICKSON 763-519-6351 WANDA MAHAFFEY 763-519-6373 DATE ATTN PHONE FAX INT IMPORTANT! - TO RECEIVE I'HIS GOV'T PRICINO YOU MUST HAVE A FO~ ELEET IDENTIFICATION NIMBER (FIN) - FIN CODE MUST BE ON O~DER. .~A, LL 1.-800--34,3-~'338 OPT#I - TO ASK FOR YOUR CITY/COUNTY/ AGEN~yms FIN CODE - AND/OR TO APPLY FOR ONE. IF ANY PROBLEMS, CALL CAROL HENDRICKSON 612-519-6351. PAYMENT IS DUE ON DELIVERY - LET US KNOW IF ADVANCE BILL)NG IS NEEDED TEA. DES - ARE ACCEPTED - SUBOECT TO REAPPRAISAL AT TIHE OF DELIVERY FOB SUPERIOR FORD -DEI. I1/ERY NOT INCLUDED - DELIVERY -~ 75(~ EI[.~ONE WAYJ THANK YOU FOR THE OPPORTUNITY TO PRESENT THIS QUOTATION. TOT Admin Minnesot Materials Manaaement Divislo,1 ADMINISTRATION BLDG., 80 SHERBURNE AVE., ST, PAUL, MN 55155; 651.298,2600, FAX: 651297,3996, TrY: 651.282.5799 DATE: DECEMBER 12, 2001 CONTRACT RELEASE: A.175(5) PRODUCT/SERVICE: AUTOMOBILES, PASSENGER VEHICLES AND CARGO VANS CONTRAC'F PERIOD: NOVEMBER 30, 2001, THROUGH JUNE 30, 2002, OR END OF MODEL YEAR EXTENSION OPTIONS: UP TO 12 MONTHS, UPON AGREEMENT OF BOTH PARTIES ACQUISITION MANAGF.~ENT SPECIALIST: BRUCE CHARON PHONE: 651.282.5578 E-MAIL: bruce.charon@state,mn.us WEB SITE: wWW,mmd.admin.$tate.mn.us CONTRACT VENDQR CONTRACT NO, TERMS DELIVER .Y VARIOUS VARIOUS NET 3~ VARIOUS BILLMARCO, lNG,, DBA HINCKLEY CHEVROLET P.O. Box 306, 100 Old Highway 61 ' Hin~kley, MN 55037 e-mail: hchevQpinenet, corn 428304 NET 30 60-90 DAYS VENDOR NO.: 200262008 01 TO PLACE ORDERS CONTACT; Mare Kohl, General Manager Phone: 320.384.6197, 651,224.2001 (Metro Line); Fax: 320.384.7079 TO EXPEDITE ORDERS CONTACT: Janet Foss, Office Manager Phone and Fax numbers same as above. Price per mile from vendor location to delivery destination: $1.00 Remit to Address: P.O. Box 306, Hinckley, MN 55037, Any option changes (adds or deletes) shall be priced at manul'acturer-to-dealer invoice. Contract Release $ (10/0t) Admin Minnesota, Materials Manaqement Divisior ROOM 112 ADMINISTRATION BLDG., E,O SHERBURNE AvI~., ST. PAUL, MN 55155; 651.296.2600, FAX: 651.297.3996, 'FRY: 651.282.5799 DATE: DECEMBER 12, 2001 CONTRACT RELEASE: A.175(5) PRODUCT/SERVICE; AUTOMOBILES, PASSENGER VEHICLES AND CARGO VANS CONTRACT PERIOD: NOVEMBER 30, 2001, THROUGH JUNE 30, 2002, OR END OF MODEL YEAR EXTENSION OPTIONS; UP TO 12 MONTHS, UPON AGREEMENT OF BOTH PARTIES ACQUiSFrlON MANAGF..~ENT SPECIALIST: BRUCE CHARON PHONE: 651282.5578 E-MAIL: bruce.charon@state.mn.us WEB SITE: wWW.mmd.admin.state.mn.us CONTRA_CT VENDOR CONTRACT NO, TERMS ~ VARIOUS VARIOUS NET 30 VARIOUS BILLMARCO, INC,, DBA HINCKI. EY CHEVROLET P.O. Box 306, 100 Old Highway 61 ' Hin(;kley, MN 55037 e-mail: hchev{~pinenet, com 428304 NET 30 60-90 DAYS VENDOR NO.: 200262008 01 TO PLACE ORDERS CONTACT: Mare Kohl, General Manager Phone: 320.384.6197, 651.224.2001 (Metro Line); Fax: 320.384.7979 TO EXPEDITE ORDERS CONTACT: Janet Foss, Office Manager Phone and Fax numbers same as above. Price per mile from vendor location to delivery destination: $1.00 Remit to Address: P.O. Box 306, Hincldey, MN 55037. .a~y option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. Contract Release 5 (10/0t) Contract Release A-175(5) Page 2 of 7 _CO__.NTRACT VENDOR GROSSMAN CHEVROLET CO., INC. 1200 West t41st Street Bumsvi~e, MN 55337 e-mail' grossmanchevl~voddnet.att.net VENDOR NO.: 095376004 00 CONTRACT NO. 428305 TERM5 NET 30 DELIVERY, ' 90-120 DAYS TO PLACE OR EXPEDITE ORDERS CONTACT: Jeff Meling, Fleet Manager Phone: 952,435,8501, 800,231.8723; Fax: 952.435.81 Price per mil,,e from vendor location to delivery destination; $1,00 Remit payment to: Grossman Chevrolet and GMAC, Any option changes (adds or deletes) shall be priced at manufacturer-to-deal~- invoice. LEE MOTOR COMPANY 428306 NET 30 90-120 DAYS Highway 212 East Box 529 Dawson, MN 56232 e-mail: leemlr~fmntiernet.net VENDOR NO.: 164474001 00 TO PLACE OR EXPEDITE ORDERS CONTACT: John Lee, VP Phone: 320.769.2365; Fax: 320.769.2323 Price Der mile from vendor location to delivery destination: $1.00 Any option changes (adds or deletes) shall be priced at manufacturer-to.dealer invoice, OWATONNA MOTOR CO., INC, 428307 NET 30 60-90 DAYS 1001 Hoffman Drive Box 263 Owatonna, MN ,55060 VENDOR NO.: 200164679 00 TO PLACE OR EXPEDITE ORDERS CONTACT: Curtis Boettcher Phone: 507.451.7860; Fax: 507.451.6558 Price Der mile from vendo~ location to delivery destination: $1,00 Any option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. C~nb-act Re~ea~ 5 (10/01) Contract Reteese A-175(5) Page 3 of 7 CONTRACT VENDOR NORTH ~,TAR GARAGE INC. 125 South Central Avenue Mi~aca, MN 563,53 e-mail: fi:~j{~mediaone.net VENDOR NO.: 038846002 00 CONTRACT NQ, 425308 TERMS NET 30 DELIVERY 90-120 DAYS TO PLACE OR EXPEDITE ORDERS CONTACT: Kevin Appelwick, Fleet Sales Phone: 651.493,1680; Fax: 208.441.5469 Price ~from ven(Jor location to delivery destination: $1,20 Any option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. CUMMINGS CHRYSLER DODGE INC. 428309 NET 30 90-120 DAYS Pine City, MN 55063 e-mail: steven-kleiber@mediaone.nat VENDOR NO.: 030226004 00 TO PLACE OR EXPEDITE ORDERS CONTACT; Steve Kleibet, Fleet Sales Phone: 651.450.6701; Fax: 401.696.1400 Price per mile from vendor location to delivery destination: $1.30 Any option changes (adds or deletes) shall be priced 'at manufacturer.to-dealer invoice. NELSON DODGE- GMC 428310 NET 30 120 DAYS 2228 College Way Fergus Falle, MN ,56538 e-mail: gwomer~rdoauto.com VENDOR NO.: 200355988 00 TO PLACE OR EXPEDITE ORDERS CONTACT: Gerry Womer, Commercial/Fleet Manager Phone: 218.739.2283, 800.726.7564; Fax: 218.736.7432 Price per mile from vendor Io~ation to delivery destination: $1.10 to $1.35 Remit to Nelson Dodge and GMAC. Any option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. Con~acl Retee~e 5 (10/01) Contra~ Release A-175(5) Page 4 of 7 CONTRACT VENDOR EGGEBRECHT CHEVROLET 4183 Haines Road Duluth, MN 558t 1 e-mai~: nvohara01~sol.com VENDOR NO.: 119995008 00 CONTRACT NO. 428311 TERMS NET 30 DELIVERY 60-120 DAYS TO PLACE OR EXPEDITE ORDERS CONTACT: Bob Ohara, Fleet Manager Phone~ 218.727.7481, 800.551.8638; Fax: 218.723.6811 Price oar mile from vendor location to delivery deslJnation: $0.?0 Remit payment to: Eggebrecht Chevrolet and GMAC. Any option changes (adds or deletes) shall be priced at manufacturer-to-dealer inveice. NELSON FORD 428312 NET 30 60-120 DAYS 1-94 and Highway 210 West P.O. Box 338 Fergus Falls, MN 56538 VENDOR NO.: 035330014 00 TO PLACE OR EXPEDITE ORDERS CONTACT: Gerry Womer, Commercial/Fleet Manager Phone: 218.73g.2283, 800.726.7564; Fax: 218.736.7432 Price per mile from vendor location to delivery destination: Varies, see vehicle sheets. Remit to Nelson Ford and GMAC. Ar~y option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. C & M FORD SALES, INC. 428315 NET 30 g0 DAY8 Highway 75 North P.O. Box t0 Hallock, MN 56728 VENDOR NO.: 031151002 00 TO PLACE OR EXPEDITE ORDERS CONTACT: Paul Blomquist Pllone: 2t8.843.2652; Fax: 218.843.2653 Price per mile from vendor location to delivery destination; $1.00 Any option changes (adds or deletes) shall be prE;ed at manufacturer-to-dealer invoice. C.o~tra~ Release 5 (10/0t) Con,ct R~lease A-175(5) Page 5 of 7 CONTRACT VENDOR MCKAY'S FAMILY DODGE 2020 Division Sl~eet Waits Park, MN 56387 CONTRACT.NO. TERMS DELIVERY 428314 NET 30 60-120 DAYS VENDOR NO.: 070903013 00 TO PLACE OR EXPEDITE ORDERS CONTACT: Tom Gub'tmiiler, Fleet Manager Phone: 763,421.8000, 800.481.7300; Fax: 763.576.3163 Price oar mile from vendor location to delivery destination: $1.00 option changes (adds of deletes) shall be priced at manufacturer-to-dealer invoice. OLIVIA CHRYSLER CENTER 1407 West Lincoln Olivia. MN 56277 428315 NET 30 45-60 DAYS VENDOR NO,: 145113002 00 TO PLACE OR EXPEDITE ORDERS CONTACT: .Duane Brause, Fleet Manager Phone: 952.808.2459, 800,279.5337; Fax: 952.808.2470 Price per mile from vendor location to delivery destination: $1.00 for Groups 11 and 12 $1.25 for Groul~ 20 and 21 Any option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. AIRLAKE FORD-MERCURY, INC. P.O. Box 1217 21100 Gateway Drive Lakevilla, MN 55044 e-math davetguru~eol.com 428324 NET 30 120 DAYS VENDOR NO.: 012095012 00 TO PLACE OR EXPEDITE ORDERS CONTACT: Dave Thomas, Fleet Sales Manager Phone: 612.750.12-/5; Fax: 952.985.2498 Price oar mile Imm vender location to delivery destination: $1.00 Any option changes (adds or deletes) shall be priced at manufacturer-to-dealer invoice. Release 5 (10/01) Contract Release A-175(5) Page 6 of 7 CONTRACT USERS. This Contract is available to State agencies and to members of the State's Cooperative Purchasir~g Venture (CPV) program at the same prices, terms, and c,,onditions. STATE AGENCY CONTRACT USE, This Contract must be used by State agencies unless a specific exception is granted by the Acquisition Management Specialist. AGENCY ORDERING INSTRUCTIONS. Orders are to be placed directly with the Contract Vendor. State agencies should use a contract release order (CRO) or a blanket purchase order (BPC), The person ordering should include his or her name and phone number. Orders may be submitted via fax. KLIN PRODUCT COMMODITY CODE QUANTiTy EN~RONMENTALCODE 0001 Automobile 250-01-00000 Each RC 0002 Van 250`03-00000 Each RC 0003 Vehicle - Sport Utility 250`06.00000 Each RC 0004 Delivery Cost · 010-02-00000 n/a RC= Recycled content SPECIAL TERMS AND CONDITIONS SCOPE~ This is a multiple-award Contract for automobiles, passenger vehicles and vans for use by all agencies for the 2002 model year. PRICES, Prices am firm through the 2002 model year. NOTE. At no time should the ordering entity pay more than the Contract price. Agencies must contact the AMS immediately and fill out a Vendor Performance Report if them is a discrepancy between the price on the Invoice and lhe Contract pri~e. TO ORDER VEHICLES. The Materials Management Division (MMD) reqUeSts that any agency requiring vehicles contact Travel Management Division (TMD) to check if the vehicle(s) ara available from the TMD rental fleet. TMD has reasonable rental rates and excellent service for its fleet vehicles. The TMD contact person Is Susan Koosman, Assistant Director, 651.296,9997, for rental rates and olher information. If TMD is unable to meet your requirements then order as shown below. TO ORDER VEHICLES iSTATE AGENCIES ONLY): Agencies am to submit contract release orders (CRO) direct to the Conl~act Vendor listed. Agencies ara to' be sure to send the CRO to Contract vendor with the correCt Contract number, group number, proper specifications with color choice ancl any options selected, Agencies are to show correct price for vehicle with options selected. On CROs, agencies must be sure to enter the following information: 1. Enter the Contract number 2. Enter the Order Line number 3. Enter the required quantity Enter the Contract line from the Contract that is being ordered. Prices submitted to the State of Minnesota in response to an invitation to bid should not include Federal Excise Tax; the State is exempt there,(om. A Federal Excise Tax exemption certificate will be furnished upon request. Contra~t Release 5'(10/01) Contract Release A-175(5) Page 7 of 7 NOTE. No terms providing for interest on invoices n6t promptly paid by the State shall bo included in any response. Any such interest is controlled by the terms of Minn. Stat. § 16A. t24. DELIVERY. All vehicles shall be delivered FOB Destination; transportation charges to be listed as a separate cost to any State agency. No delivery can be made on Saturday or Sunday or after 4:00 p,m, on weekdays without prior approval from the agency to which the vehicle is to be delivered, PRE-DELIVERY AND SERVICE FOR ALL VEHICLES. Prior to the delivery, the vehicle must be completely serviced by the Contract Vendor (dealer) in accordance with the manufacturer's standard new car "make-ready" recommendations. Crankcase, differential, and transmission must be filled to capacity as recommended by the manufacturer. The vehicle must contain at least one-quarter tank,of fuel when delivered. Each vehicle shall contain a pre-delivery check sheet showing which operations have been performed on the vehicle by.the selling dealer. Factory pre-delivery will not be acceptable. Pre-delivery and service by a non-Contract Vendor (dealer) is not acceptable. All make-ready must be accomplished by the delivering dealer or certified by him or her that all work has been accomplished. Any work found incomplete, not covered by warranty, will be done in the field and the cost bilied back to the deliver7 dealer, EARLY DEUVER¥. Any vehicles delivered before 30 calendar days as shown for the delivery date on the purchase order will be refused by the Travel Management Division, Travel Management Division will not accept more than five vehicles per day. The Contract Vendor must call Joyce Peilow, 651.282.2353, at least 24 hours prior to delivery. A factory invoice is required for each vehicle upon delivery. TAXES. The State of Minnesota is now required to pay 6.5 percent State Vehicle Excise Tax, The agency will pay the Vehicle Excise Tax directly to the Department of Public Safety, PURCHASE ORDERS, All purchase orders issued by State agencies against the Contract wifl b'e made on a State of Minnesota Purchase Order Form, showing the "Ship-To," and 'Bill-To" addresses. BILLING. The successful Contract Vendor shall submit separate invoices {one original and two copies) for each purchase order to the *Bill-To" address as shown on the purchase order, The Contract Vendor shall also include a manufacturer's statement of origin so the agency can properly license the vehicle, The Contract Vendor shall separate the coat of freight, if applicable, on the invoice, Thirty days prior to the effective date of the cut-off, the Contract Vendor shall notify the State of the cut-off dates on the models fomished. Failure to notify the State may result in disqualification for future State bids, NOTE. CPV members are to show Cooperative Pumhasing Permit number on each purchase order. Purchase orders are to be submitted direct to the correct Contract vendor, Invoices shall be rendered to and payment received Eom the CPV member, conlmct Release § (10/01) G*'dUp I Make. Model Name anti Type Model Number Environmental Code (' Required) Engine Size Total Vehicle Seating Capacity Tires (size and type) Spare Tire Air Bag Locations Required Equipment: 4 Do~r Sedan (please type entries) Contract No. 428313 Automatic Transmission, Cloth Upholster, Rear Window Defroster, Cruise Control, Tilt Wheel, Engine Block Healer and Air Conditioning. List Additional Standard Equipment Included With This Model (power windowS/door locks/seats, elc.) Price Per UniL Equipped as Specified Above $ Price Per Mile for Delivery from Dealer to Delivery Point $ , ~ 043 Any .O_ l~tion Chanties Jadds..oj.d_eletes} shall be I)_riced at Manufacturer-to-Dealer Invoic-, EPA Rated Miles Per Gallon: ~,O MPG City ;~ 7 Emission Control Rating: Tier 1~ LEV,~.. ULEV List all Components that Contain PVC Vi.y!: List all Components that Contain Mercury; Vendor Name and Address ' ~V ~ ~ ~ ......... MPG Highway SULEV rmpc~5 (o;~ro~ Aulorn~biles, Passenge_r Vehicles and C'.a..r.qq .v.)~f_j;.; ~,u,;~,, ':J Group 1- Full Size. (please type e~ries) Cont~ae~ No. 428308 Make, Model Name anti Type Model Number Environmental Code (' Required) Engine Size Fmnl Seat Type Total Vehicle Seating Capacity Tires (size and type) Spare Tire Air Bag Locations [Nx~e InUer~ SE ,N.r U-IDH41 N/A _CLOTH L _OW-BACK BUCKETS P225/OOR16 ALL sEAsON Full Size~ Space Saver___~_.._ DUAL FRONT List Additional StandanJ Equipment Inr, luded With This Model (power windows/door Ioelc,;/seats, etc.) AM/FM RADIO I CA~__eJET'I'E, ~ LOCKS & WINDOWS. R__EAR HEAT & AC VENTS Price Per Unit, Equipped as Specified Above $ Price Per Mile for De, livery from Dealer to Delivery Point $ 1.00 EPA Rated Miles Per Gallon: 20~MPG City 28 Emi~-~ion Control Rating: Tier 1~ LEV X_. ULEV List all Components that Corffain PVC Vinyl: Ust all ComlXmeflts that Co~tain Mercury: No~e MPG Highway SULEV Vendor Name and Address: NORTH STAR G~.. RAGE, INC. .!.2_5 fro. CENTRAL AV. P.O. BOX 34 Contact Person: E-Mail: Phone ~. Fax #: KEVlN APPELWIC .K FOS _~EDIAONE.NET 651-49a-1680 208-441-6469 Toil Free #: N/A Group t Make, Model Name and Type Mede. I Number Environmental Code (* Required) Engine Size Front Seat Type Total Vehicle Seating Capacity Tires (size and type) Spare l'ire Air Bag Locations Required Equipment: 4OoorSedan ~}L.L,- S~ '~t~ (please type enbie~) Contract .No. ~2830q .Chevrolet Im~31a 4dr sedan ~.4 Vg 60/J*O bench P225/60R16 all seasoa SBR ~SW Full Size ........... Space Saver X dz'iwer & ~sse~r f~ont ~ac Transmissbn, Clo~ Uph~s~, ~ ~nd~ Defrosts, Cruise C~ ~1{ ~eel, Engine Bt~ Heater ~d ~ C~dit~bg. list Additional Standard Equipment Included With This Model (power windows/door locks/seats, et~.) power window~, ae&t~ truak opener keyless entry am/fm/casse tte Price Per Unit, Equipped as Speciiiud Above $. 15,187.00 Price Per Mile for Delivery from Dealer'to Delivery Point $ 1,00 Ar!y Option Changes (.a,dds or delete~) shall be p, riced at Manufa~:.~rer.to-Dealer Inv0ic~., EPA Raled Miles Per Gallon.: 21 MPG City 32 MPG Highway Emission Control Rating: Tier 1 x .LEV. ULEV SULEV List atl Components that contain PVC Vinyl; List all Components that Contain Mercury: Vendor Name and Address Contact Pe~son: E-Mail: Phone #- Fax none Hi nckley Chevrolet ~O ~ox 306, ~O0 O3.d ~twy 6~ Hinckley, YI~ 55037 Merc Kohl mkohl.hohev~.acicable.net 320-3~{4-6197 ~2o-384-7979 Toll Free #- 877-669-9117 IJbl,,:] 5 [()~.U'I) Au[°r~]ob~le.s,_P_'.3.S.s. enger Vel"cles__an.d_C_'a,.cgg. _V.a.,!S. Page 25 Group I Make, Model Name and Type Model Number Environmental Code (* Required) Engine Size Front Seat Type Total Vehicle Seating Capacity Tires (size and type) Spare Tire Alt Bag Locations Required Equipment: 4 Door Sedan (please type entries] Conbraot No. 428304 Chevrolet Malibu 4dr sedan 3.1 V6 bucket P215/60R15 all season ~]]~ -~W Full Size Space Saver X Drive~ & pa~ae~er front Automatic Transmission, Cloth Upholstery, Rear Window Defroster, Cruise Control, Tilt Wheel, Engine Block Healer and Air Conditioning. List Additional Standard Equipment Included With This Model (power windows/door locks/seats, etc.) ABE PSwer locks intermittent uipere am/fm/CD power trunk release Pdce Per Unit, Equipped as Specified Above $. 13,02~.OO Price Per Mile for Delivery from Dealer to Delivery Point $ 1.00 Any O=tio_n__Chan_ele$ (adds or delet-_s) s.h..a.!! be 13riced at Martufacturer-to~.Dealer In.voic-. EPA Rated Miles Per Galton.: 2.0 Emission Cnnlrol Rating: Tier 1 x Lisl all Components that Contain PVC Vinyl: List all Components that Contain Mercury: Vendor Name and Address MPG City 29 LEV ULEV ~a MPG Highway SULEV none H±nckley Chevrolet P0 ~ox 306, l(.X3 Old I{~ 61 Hinck]ey, Mn 55037 Toll Free #: 877.-~69-9117 Contac{ Person: Marc Kohl E-Mail: mkoh], hchev~cicab le .ne t Phone #: ~2()-384-6197 ! ax #: 320-384-7979 ~¢~5 (o~,,o{) Automobile.% P__as_s_e_n_q.e_[_Vehicles and Carao .V,~ras. Page CITY COUNCI~ LETTER AGENDA SECTION: Consent ORIGINATING DEPT.: CITY MANAGER NO: ~- A - ~ Community Development APPROVAL ITEM: Resolution 2002-44, Lot Split BY: Tim Johnson NO: Case # 2002-0704, 2120 43a Ave NE DATE: July 12, 2002 Issue Statement: A request for a lot split of the property located at 2120 43~a Avenue NE. The applicant is proposing to acquire a small portion of property measuring 1,080 square feet from the neighbor at 2112 43~a Avenue, and add this portion to his property in order to accommodate a future detached garage addition. Bacl~round: Section 9.410(4) of the Columbia Heights Zoning Ordinance requires that an application for a lot split be reviewed by the Planning and Zoning Commission which shall provide a report to the City Council either recommending approval or denial of the proposed lot split. There are no previous Planning and Zoning Commission cases on this site. Analysis: The proposed 10t split meets the minimum requirements of the Zoning and Subdivision Ordinances. The proposed split would keep both lots in conformance with City lot size requirements, and will allow for both lots to meet the minimum lot widths required. This split will provide both lots the ability to construct future detached garages and still meet the minimum setback requirements. Recommendation: The Planning and Zoning Commission held a Public Hearing for the request on July 9, 2002. They voted to recommend City Council approval of the lot split at it is consistent with City zoning and subdivision standards. Recommended Motions: Move to waive the reading of Resolution 2002-44, there being ample copies available to the public. Move to adopt Resolution 2002-44, a resolution approving a lot split of the property at 2120 43~ Avenue NE. Attachments: Staff Re~oort; Resolution 2002-44, Completed application.form; Certi~cate of Survey; Area map; and Notice of Public Hearin8 COUNCIL ACTION: CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at: www. ci. columbia-heights.mn, us Case: 2002-0704 Page: 1 STAFF REPORT TO THE PLANNING AND ZONING COMMISSION FOR Tm*~ JULY 9, 2002 PUBLIC HEARING Case #: 2002-0704 GENERAL INFORMATION Owner: Dave Linsk Applicant: same Address: 2120 43rd Avenue NE Columbia Heights, MN Phone: (763) 788-9586 Parcel Address: 2120 43rd Avenue NE Zoning: R-1 Single-Family Residential Comprehensive Plan: LDR, Low Density Residential Surrounding Zoning and Land Uses: Zoning North: R-1 South: R-1 East: R- 1 West: R- 1 Land Use North: Residential South: Residential East: Residential West: Residential BACKGROUND Explanation o_f Request: A request for a lot split of the property located at 2120 43rd Avenue NE. Currently 2120 43rd Avenue NE is an abnormally shaped lot measuring 67 feet in the fi'ont, 25 feet in the back, and 191 feet in depth. The applicant is proposing to acquire a small portion of property measuring 1,080 square feet fi.om the neighbor at 2112 43rd Avenue, and add this portion to his property in order to accommodate a future detached garage addition (see survey). This split would keep both lots in conformance with current City lot size requirements. Section 9.410(4) of the Columbia Heights Zoning Ordinance requires that an application for a lot split be reviewed by the Planning and Zoning Commission which shall provide a report to the City Council either recommending approval or denial of the proposed lot split. Case Histo~_ : There are no previous Planning and Zoning Commission cases on this site. THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION Of SERVICES EQUAL OPPORTUNITY EMPLOYER CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at: www. ci. columbia-heights, mn. us Case: 2002-0704 Page: 2 ANALYSIS Surrounding Property: The surrounding property in all four directions is zoned R-1, Single-Family Residential, and is used residentially. Technical Review: Section 9.903 of the Columbia Heights Zoning Ordinance regulates lot area, setback, height and lot coverage requirements in the R-1 District, and Section 9.603 regulates accessory structures and lot coverages. Applicable requirements are as follows. Minimum lot size shall be 8,400 square feet for a single family home - the proposed split . would provide 2120 43rd Ave with 9,920 square feet, and 2112 43rd Ave with 18,105 square feet, both of which exceed minimum lot size requirements. Minimum lot width shall be 70 feet - The current lot width for 2120 43rd Avenue is 67.18 feet, but with the additional square footage the new lot width will be 74.18 feet, thus meeting the City requirement. Detached accessory structures shall be at least 3 feet away from side and rear property lines - there is currently a detached garage on the property at 2120 43r~ Avenue, and with a future proposed addition the garage setback will be at 4 + feet, thus meeting requirements. Any lot over 6,500 square feet may have a lot coverage of up to 30% - the lot coverages on both 2120 and 2112 43rd Avenue will be well under 30%, so the proposal meets these requirements. Compliance with Ci~ Comprehensive Plan: The City Comprehensive Plan designates this area for future low density residential development. Summa~_ : · The proposal is consistent with the City Comprehensive Plan and meets the minimum requirements of the Columbia Heights Zoning Ordinance. CONCLUSION Staff Recommendation: Staff recommends approval of the lot split as it meets the technical standards of the Zoning Ordinance and is consistent with the City Comprehensive Plan. Recommended Motion: Move to recommend City Council approval of the lot split as it is consistent with City subdivision standards. Attachments: Completed application form; Certificate of Survey; Area map; Resolution; and Notice of Public Hearing THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAL OPPORTUN}TY EMPLOYER CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at: www. ci. colurnbia-heights, mn. us Thomas Ramsdell, Chair Ted Yehle l~onns Schmitt Stephan Johnson Tamara Ericson PLANNING AND ZONING COMMISSION NOTICE OF PUBLIC HEARING Notice is hereby given that the Planning and Zoning Commission will conduct a public hearing in the City Council Chambers of City Hall, 590 N.E. 40th Avenue, at 7:00 p.m. on Tuesday, July 9, 2002. The order of business is as follows: A request for a lot split of the property located at 2120 434 Avenue NE. The current property measures approximately 9,920 square feet, with the proposed split parcel to be combined of 1,080 square feet. The proposal will split a portion of the property at 2112 43rd Avenue along the abutting property line that will allow for a future detached garage addition. Section 9.410 of the Columbia Heights Zoning Ordinance requires that an application for a lot split be reviewed by the Planning and Zoning Commission, which shall submit its findings and provide a recommendation to the City Council. Notice is hereby given that all persons having an interest will be given an opportunity to be heard. For questions, you may contact Tim Johnson, City Planner, at 783-706-3673. Planning and Zoning Commission CITY OF COLUMBIA HEIGHTS Walt Fehst City Manager tj The City of Columbia Heights does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its services, programs or activities. Upon request, accommodation will be provided to allow individuals with disabilities to participate in all City of Columbia Heights' services, programs and activities. Auxiliary aids for handicapped persons are available upon request when the request is made at least 96 hours in advance. Please call the City Council Secretary at 706-3611, to make arrangements. (TDD/706-3692 for deaf or hearing impaired only.) ]-HE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAL OPPORTUNITY EMPLOYER CITY OF COLUMBIA HEIGHTS **PRE-APPLICATION MEETING REQUIRED WITH CITY PLANNER BEFORE SUBMISSION** APPLICATION FOR: Re Zoning/Zoning Amendment Variance Conditional Use Permit Subdivision Approval Site Plan Approval Lot Split Vacation 1. Street Address of Subject Property: 2. Legal Description of Subject Property: 4. Owner: Name: Application Date Case No: 074:50 .,2 -- O~ 0 a'/ Fee: /~,~ Date pa: Receipt No: Address: '~/_,2. tff .~,~ .,~/tO-6,~ Address: Phone: 7,0'r.,~ '" 7 ~ ~- ~,-,~' fill Phone: 5. Reason for Request: (Please attach a written narrative describing request and justification for request) 6. Zoning: (Staffwill fill out) Applicable _City Ordinance # Section Present Zoning Proposed Zoning Present Use Proposed Use 7. Exhibits Submitted (maps, surveys, diagrams, etc) 5urw~j5 8. Acknowledgement and Signature: The undersigned hereby represents upon all of the penalties of law, for the purpose of inducing the City of Columbia Heights to take the action herein requested, that all statements herein are true and that all work herein mentioned will be done in accordance with the Ordinances of the City of Columbia Hej,fihts and the laws of the State of Minnesota. '¢ Signature °f Applicant:/D~J~ Date: Taken by: ,~~ 4420 I 4338 ~ 4349 [ 4452 4446 4440 4434 4428 4422 I 4416 4414 [I 4410 4332 4326 4520 1900 4335 4342 4536 4330 4345 4337 4355 4327 4340 4334 4526 4459 ~4 O4 4451 ~4 4437 4427 44 4417 I I 44 4409 44 44 42 4301 SILVi I A Iz 4310 4231 4225 2ND 4323 4324 4315 4316 4307 4508 4300 170,64 170.$' 171.5' 4261 4262 4133 4128 4301 AVE 4319 4318 4313 4312 2005 2015 2103 2105 I 7~.o' I ~.o' t ~9.~' I 70.0' / i' 4237 :.3229 4201 AVE ~" 4147 4156 4152 ~ 4143 ~ 4141 4146 ~ 4139 4128 ~ 4129 4126 4151 4141 4137 ~ 4131 2115 ~Z BEA 4232 4226 4220 4208 4200 4158 4249 4245 4231 4219 4215 4205 4163 4146 4151 4152 4141 4122 ~/ RESOLUTION NO. 2002-44 SUBDIVISION REQUEST CITY OF COLUMBIA HEIGHTS 590 - 40TH AVENUE N.E. COLUMBIA HEIGHTS, MN 55421 I, Dave Linsk, Hereby request a split of PIN 36 30 24 14 0003 Legally described as: Lot 2, Block 1, Auditor's Subdivision of Walton's Sunny Acres Fourth, Anoka County, Minnesota. PIN 36 30 24 14 0002 Legally described as: That part of Lot 1, Block 1, Auditor's Subdivision of Walton's Sunny Acres Fourth, Anoka County, Minnesota, which lies West of a line drawn from a point on the North line thereof distant Sixty-seven and Eighteen hundredths (67.18) feet East of the Northwest corner thereof to a point on the South line thereof distant Twenty-five (25) feet East of the Southwest comer thereof. THE DESCRIPTIONS HENCEFORTH TO BE: That part of Lot 1, Block 1, Auditor's Subdivision of Walton's Sunny Acres Fourth, Anoka County, Minnesota, which lies West of a line drawn from a point on the North line thereof distant Sixty-seven and Eighteen hundredths (67.18) feet East of the Northwest comer thereof to a point on the South line thereof distant Twenty-five (25) feet East of the Southwest corner thereof. TOGETHER WITH: That part of Lot 2, Block 1, Auditor's Subdivision of Walton's Sunny Acres Fourth, Anoka County, Minnesota, described as follows:: Beginning at the Northeast corner of said Lot 2, thence Southerly on the East line a distance of 94.00 feet; thence Westerly and parallel with the North line a distance of 16.00 feet; thence Northeasterly to a point on the North line, distant 7.00 feet westerly of the Northeast corner, thence Easterly to the point of beginning. Lot 2, Block 1, Auditor's Subdivision of Walton's Sunny Acres Fourth, Anoka County, Minnesota, Except the following: That part of Lot 2, Block 1, Auditor's Subdivision of Walton's Sunny Acres Fourth, Anoka County, Minnesota, described as follows: Beginning at the Northeast comer of said Lot 2, thence Southerly on the East line a distance of 94.00 feet; thence Westerly and parallel with the North line a distance of 16.00 feet; thence Northeasterly to a point on the North line, distant 7.00 feet westerly of the Northeast corner; thence Easterly to the point of beginning. Be it further resolved that special assessments of record in the office of the City of Columbia Heights as of this day, against the above described property, are paid. Any pending or future assessments will be levied according to the new split as approved this day. Any lot split given approval shall become invalid if the resolution, motion or other Council action approving the said lot split is not filed with the County Recorder within one (I) year of the date of the Council action. PLANNING & ZONING DEPARTMENT ACTION: This ~ day of ,2002 Offered by: Seconded by: Roll Call: Zoning Officer Signature of Owner, Notarized Owner's Address Telephone No. SUBSCRIBED AND SWORN TO BEFORE ME this day of ,2002 CITY COUNCIL ACTION: Notary Public This day of ,2002. Offered by: Seconded by: Roll Call: Secretary to the Council Gary Peterson, Mayor CITY COUNCIL LETTER Meeting of: July 22, 2002 AGENDA SECTION: ORIGINATING DEPT.: CITY MANAGER NO: .DF- A-q License Department APPROVAL ITEM: License Agenda BY: Shelley Hanson~~, DATE:~/~~ NO: DATE: July 18 2002 BY: BACKGROUND/ANALYSIS Attached is the business license agenda for the July 22, 2002 City Council meeting. This agenda consists of applications for Contractor licenses for 2002, a Temporary On Sale Beer License for Immaculate Conception Fun Fest Celebration being held August 10-11, and a Mobile Food Catering Vehicle for an auction that will be held in the City August 4, 2002. At the top of the license agenda you will notice a phrase stating *Signed Waiver Form Accompanied Application. This means that the data privacy form has been submitted as required. If not submitted, certain information cannot be released to the public. RECOMMENDED MOTION: Move to approve the items as listed on the business license agenda for July 22, 2002 as presented. COUNCIL ACTION: TO CITY COUNCIl. July 22, 2002 *Signed Waiver Form Accompanied Application 2002 BUSINESS LICENSE AGENDA BLDG CONTRACTORS LICENSES *Seasonal Control Inc. *Advantage Air *Donnelly Dotson *Topline Advertsising 7620 Lyndale Ave So 325 130th St W. Shakopee. 2519 E 25th St. Mpls 11775 Justen Cir #A, Maple Grove $50.00 $50.00 $50.00 $50.00 POLICE MOBILE FOOD CATERING VEHICLE Curbside Dining Express (for auction 8/4/02) 8652 Polk St, Blaine $50.00 POLICE TEMPORARY ON SALE BEER Jerilyn Barker, Immaculate Conception Church Fun Fest 8/10-11/02 4030 Jackson St REQUESTING FEES BE WAIVED The Church of the Immaculate Conception June 28,2002 City of Columbia Heights 590 - 40th Avenue N.E. Columbia Heights, MN 55421 Dear City Official(s): Enclosed is the license application for our annual Fun Fest at The Church of the Immaculate Conception. A Certificate of Insurance has been requested by Tom Schumacher, Business Administrator, and will be forwarded to you as soon as it is received. We have also sent our application for food license to Anoka County. We are requesting the fees for the license be waived as we are a non-profit organization. Thank you for your assistance. ~rely;- . Fun Fest Committee Enclosure CC: Tom Schumacher tel (763) 788-9067, fax (763) 788-0202 4030 Jackson Street Northeast, Columbia Heights, MN 55421-2929 CITY OF COLUMBIA HEIGHTS FINANCE DEPARTMENT COUNCIL MEETING OF: ',J ~ ~'~. ~gga~ STATE OF MINNESOTA COUNTY OF ANOKA CITY OF COLUMBIA HEIGHTS Motion to approve payment of bills out of the proper funds, as listed in the attached check register covering Check Number ~o~.~ ~ through ~o///~ in the amount of $ /,/a 7). ~,/~. 702. These checks have been examined and found to be legal charges against the CITY OF COLUMBIA HEIGHTS, and are hereby, recommended for payment. ACS FINANCIAL SYSTEM 07/18/2002 15:28:37 FUND DESCRIPTION 101 GENEPJkL 201 COMMUNITY DEVELOPMENT FUND 202 A/~OKA COUNTY CDBG 203 P~2LKVIEW VILLA NOR~ 204 ECONOMIC DEVELOPMENT AUTH 213 PARKVIEW VIDLA SOLTCH 225 CABLE TELEVISION 235 RENTAL HOUSING 240 LIBRARY 250 COL HGHTS AFTER SCHOOL ENRI 276 LOCAL LAW ENFORCE BLK GRANT 402 STATE AID CONSTRUCTION 415 CAPITAL IMPROVEMENT - PIR 439 FIRE CAPITAL EQUIPMENT 601 WATER UTILITY 602 SEWER UTILITY 603 REFUSE FUND 604 STORM SEWER UTILITY 609 LIQUOR 701 CENTRAL GARAGE 720 DATA PROCESSING 880 PERMIT SURCHARGE 881 CONTRIBUTED PROJECTS-REC 883 CON~fRIBUTED PROJECTS-GEN 884 INSURANCE 885 ESCROW 886 IN~;ESTMENT TRUST 887 FLEX BENEFIT TRUST FUND TOTAL ALL FUNDS Check History DISBURSEMENTS 61,537.31 1,935.80 21.00 13,723.09 741.30 5,701.27 4,188.39 501.43 3,448.76 45.32 4,511.27 939.10 15.98 1,839.15 1,883.82 53,633.16 105,318.35 674.38 329,941.26 8,681.01 1,329.75 1,493.39 85.15 243.10 739.73 281,894.28 780,000.00 7,600.17 1,672,666.72 CITY OF COLUMEIA HEIGHTS GL060S-V06.40 RECAPPAGE GL540R B~K RECAP: BANK NAME ................................ BANK CHECKING ACCOUNT TOTAL ALL BANKS DISBURSEMENTS 1,672,666.72 1,672,666.72 ACS FINANCIAL SYSTEM 07/18/2002 15 Check History 07/22/02 COUNCIL LISTING CITY OF COLUMBIA HEIGHTS GL540R-V06.40 PAGE 1 BANK VENDOR CHECK NUMBER AMOUNT BANK CHECKING ACCOUNT BELLBOY BAR SUPPLY CHOICE POINT SERVICES DUGDALE/M~RY EDLUND/DORINDA FRITZ COMPANY INC GENUINE PART$/NAPA AUTO GRISSS-COOPER CO mmER/m T HESLIN/BONNIE JOHNSON BROS. LIQUOR CO. KUEHN/JSAN LOWER/REBECCA MARSHALL IGA INC. MC GREGOR/JOSEPH METRO COUNCIL ENVIROMENT MINNESOTA CROWN DISTRIBU MINNESOTA NAHRO MNREC & PK~SOC - MRP MN STATE TRF~%S BUILDING MOELLER/KAREN NORTHEAST STATE BA/~ OFFICE DEPOT OKERSTROM/LEE PETTY CASH - KELLY BECKE PETTY CASH - MARY DUGDAL PHILLIPS WINE & SPIRITS QUALITY WINE & SPIRITS QWEST COMMUNICATIONS RELIANT ENERGY MIMNEGASC RINEHART/DENNIS & RENEE SANDBACK/MARGE SCHUMACHER/PJh~DY TREMPE/JUDY VERIZON WIRELESS VISA WAL-MART WINDSCHITL/KEITH WRESSELL/HELEN XCEL ENERGY (N S P) ZUELKE/VIOLA AFFINITY PLUS FEDERAL CR FIRST COMMUNITY CREDIT U HEALTH PARTNERS ICMA RETIREMENT TRUST 45 JEFFERSON PILOT MN CHILD S~PORT PAYMENT ORCHARD TRUST COMPk~7 98963 333.68 98964 218.00 98965 28.98 98966 1,750.37 98967 7,635.84 98968 103.71 98969 36,368.36 98970 4.03 98971 220.20 98972 11,347.90 98973 111.59 98974 30.77 98975 1,642.80 98976 11.72 98977 1,188.00 98978 93.50 98979 235.00 98980 500.00 98981 305.39 98982 85.15 98983 280,000.00 98984 84.63 98985 53.30 98986 14.82 98987 129.66 98988 397.25 98989 14,285.47 98990 179.24 98991 4,255.41 98992 4.73 98993 45.00 98994 432.41 98995 16.31 98996 89.67 98997 417.21 98998 100.00 98999 6.60 99000 39.00 99001 389.13 99002 39.00 99003 400.00 99004 2,380.00 99005 57,216.16 99006 11,604.96 99007 640.26 99008 707.43 99009 7,135.50 ACS FINANCIAL SYSTEM o7/18/2oo2 15 Check History 07/22/02 COUNCIL LISTING CITY OF COLUMBIA HEIGHTS GL540R-V06.40 PAGE 2 VENDOR CHECK NUMBER AMOUNT BANK CHECKING ACCOUNT PERA PUBLIC MANAGERS ASSOCIAT UNION 320 UNITED WAY VANTAGEPOINT TRANSFER - WELLS F~GO - PAYROLL AC WI DEPARTMENT OF REVENUE DAVES SPORT SHOP EAST SIDE BEVERAGE CO FRITZ COMPANY INC GENUINE PARTS/NAPA AUTO GRI~S-COOPER & CO JOHNSON BROS. LIQUOR CO. KACZMAREK/MARCIA KUETNER DIST. CO. MARK VII DIST. MENARDS CASHWAY LUMBER-F MINNESOTA UC FUND MN DEPT OF ADMINISTEATIO MUSCOVITZ/PATRICIA NORTHEAST STATE BANK PAUSTIS & SONS PETTY CASH - KELLY BECKE PHILLIPS WINE & SPIRITS PIGS UNLIMITED INC POSTAGE BY PHONE REVERSE QUALITY WINE & SPIRITS QWEST COMMUNICATIONS SAM'S CLUB SINN/GREG STAR TRIBUNE LBA /JOHN WINE MERCHANTS XCEL ENERGY (N S P) A.R.K. ~AGEMENT ASSOCI ACE HARDWARE ADAM'S PEST CONTROL, INC AIRGAS SAFETY ALL SAINTS BRAND DISTRIB ALLINA HFAtTH SYSTEM AMERICAN ENGINEERING TES AMERICAN STORE/THE AMERIPRIDE ANOKA CTY - CENTRAL COMM APPLE LAND LAW ENFORCEME ARCTIC GLACIER ASPEN MILLS, INC. 99010 30,043.26 99011 40.00 99012 1,257.16 99013 39.00 99014 225.00 99015 177,465.07 99016 340.65 99017 335.48 99018 38,185.41 99019 3,761.33 99020 57.07 99021 22,129.82 99022 21,079.66 99023 264.06 99024 64,079.70 99025 56,470.94 99026 31.16 99027 4,768.23 99028 452.32 99029 60.05 99030 500,000.00 99031 1,053.31 99032 84.84 99033 543.25 99034 200.00 99035 6,000.00 99036 15,531.17 99037 102.51 99038 321.87 99039 41.02 99040 1,127.20 99041 149.97 99042 2,743.85 99043 8,574.18 99044 385.00 99045 342.71 99046 66.56 99047 169.90 99048 1,153.00 99049 505.00 99050 352.10 99051 19.98 99052 89.40 99053 916.00 99054 1,410.00 99055 954.80 99056 681.50 ACS FINANCIAL SYSTEM 07/18/2002 15 Check History 07/22/02 COUNCIL LISTING CITY OF COLUMBIA HEIGHTS GL540R-V06.40 PAGE 3 BANK VENIDR CHECK NUMBER AMOUNT BANK CHECKING ACCOUNT ATLAS AUTO BODY 99057 699.85 AWWA 99058 34.50 BANYON DATA SYSTEMS 99059 1,408.08 BARNA GUZY & STEFFEN LTD 99060 14,254.62 BAUER BUILT TIRE & BATTE 99061 46.53 BELLBOY CORPORATION 99062 13,647.24 BFI/WOODL~iE SANITARY SE 99063 104,569.37 BITUMINOUS ROADWAYS, INC 99064 914.92 BRYAN ROCK PRODUCTS, INC 99065 556.47 BUILDING FASTENERS 99066 8.58 BUREAU OF CRIMINAL ~PR 99067 630.00 CAMDEN PET HOSPITAL 99068 439.00 CAPITOL FURNITURE SALES 99069 472.77 CARDINAL SERVICES 99070 125.00 CENTER FOR ENERGY/ENVIRO 99071 250.00 CENTRAL IRRIGATION SUPPL 99072 42.78 CHISAGO I~S DISTRIBUTI 99073 3,880.90 CITY OF ST PAb-L 99074 505.00 CITY PAGES 99075 433.00 CLAREYS S~ETY EQUIPMENT 99076 12.05 CI~K PRODUCTS INC 99077 107.23 COCA-COLA BOTTLING MIDWE 99078 1,130.53 COLUMBIA HEIGHTS RENTAL 99079 24.01 COLUMBIA PARK CLINIC 99080 162.00 COMPCARE INDUSTRIES 99081 32.18 CREIGHTON BP, ADLEY GUZZET 99082 4,132.03 CREST VIEW CORPORATION 99083 12,884.92 CSC CREDIT SERVICES 99084 25.00 CYS UNIFORMS 99085 247.79 DIAMOND VOGEL PAINTS 99086 467.00 DOUGS TV & ~PLIANCE 99087 83.20 DPMS 99088 29.75 EMERGENCY MEDICAL PRODUC 99089 84.65 ENCOMPASS 99090 987.94 FIDELITY SERVICES INC 99091 4,728.22 FI~DWORKS 99092 306.40 FIRE EQUIPMENT SPECIALTI 99093 263.10 FRIENDLY CHEVROLET GEO, 99094 1,579.18 G & K SERVICES 99095 404.93 GENUINE PARTS/NAi~A AUTO 99096 399.17 GILLUND ENTERPRISES 99097 45.07 GLENWOOD INGLEWOOD 99098 147.16 GOODINCO. 99099 295.76 }{AB INC 99100 200.00 HALLMANOIL 99101 502.21 HARVEST INTERIORS 99102 888.00 HOHENSTEINS INC 99103 6,743.70 ACS FINANCIAL SYSTEM 07/18/2002 15 Check History 07/22/02 COUNCIL LISTING CITY OF COLUMBIA HEIGHTS GL540R-V06.40 PAGE 4 BANK VENDOR CHECK NUMBER AMOUNT BANK CHECKING ACCOUNT HOME DEPOT #2802 99104 468.80 HONEYWELL INC 99105 16,704.00 INSTRUMENTAL RESEARCH IN 99106 126.40 IPC PRINTING 99107 490.53 JOHNSON PAPER & SUPPLY C 99108 435.36 K & S ENGRAVING 99109 11.45 KEEP INC/THE 99110 25.00 KENNEDY & GRAVEN 99111 58.00 LOWRY CENTPJ~L BOWLERS 99112 282.70 LUEE-TECH 99113 114.00 MAC QUEEN EQUIPMENT CO. 99114 334.55 MEDTOX lABORATORIES, INC 99115 87.00 MENARDS CASHNAY LUMEER-F 99116 128.93 METRO FIRE 99117 248.85 METROPOLITAN COUNCIL WAS 99118 51,992.10 MIDWAY FORD 99119 639.77 MIiVNEAPOLIS OXYGEN CO. 99120 58.85 MINNEAPOLIS SAW CO. 99121 12.91 MINNESOTA GFOA 99122 200.00 MINNESOTA'S BOOKSTORE 99123 8.52 MN HIGHWAY SAFETY & RESE 99124 813.00 NORTH CEI~L AMBULANCE 99125 1,839.15 OFFICE DEPOT 99126 351.10 OMNI ROOFS INC 99127 155.00 ONVOY 99128 24.95 PC SOLUTIONS 99129 1,260.02 PEPSI-COLA-7 UP 99130 505.53 PETERSON/RONALD 99131 207.67 RAPIT PRINTING - FRIDLEY 99132 361.89 RESOURCE DOCUMENTS & ADV 99133 308.34 SAM GIBSON SEWER COMPANY 99134 113.00 SCHINDLER ELEVATOR CORP 99135 1,944.00 STREICHER'S GUN'S INC/DO 99136 3,301.45 SUN PUBLICATION 99137 69.30 SYSTEMS SUPPLY INC. 99138 237.22 TENNANT COMPANY 99139 119.22 TRI COUNTY BEVERAGE & SU 99140 108.00 TRUGREEN CHEMLAWN 99141 288.62 TWIN CITY GA_RAGE IX)OR CO 99142 52.19 TWIN CITY TRANSPORT & RE 99143 80.00 UNITED RENTALS 99144 82.52 VECTOR INTERNET SERVICES 99145 150.00 VERIZONWIRELESS 99146 69.44 WILLIAMS STEEL & HARDWAR 99147 17.23 ZIEGLER INC 99148 65.74 1,672,666.72 *** ACS FINANCIAL SYSTEM 07/18/2002 15 Check History 07/22/02 COUNCIL LISTING CITY OF COLUMBIA HEIGHTS GL540R-V06.40 PAGE 5 BANK VENDOR CHECK NUMBER AMOUNT REPORT TOTALS: 1,672,666.72 RECORDS PRINTED - 001188 CITY COUNCIL LETTER Meeting of July 22, 2002 AGENDA Public Hearings ORIGINATING DEPARTMENT: CITY MANAGER SECTION: Fire APPROVAL ITEM: Close Hearing BY: Charlie Thompson Rental License Revocation DATE: July 16, 2002 DATE: NO: The matter of the revocation of the license to operate a rental unit(s) within the City of Columbia Heights against Mohsen Dessouki regarding rental property at 4610-4612 Fillmore Street for failure to meet the requirements of the Residential Maintenance Code was scheduled to commence at the City Council meeting of July 22, 2002. The public hearing on this property may now be closed in that the property owner has asked for and received an extension to complete the work on the outside of the building. RECOMMENDED MOTION: Move to Close the Public Heating Regarding the Revocation or Suspension of the Rental License Held by Mohsen Dessouki Regarding Rental Property at 4610-4612 Fillmore Street in that the Property Owner has received a extension to complete the work on the outside of the building. COUNCIL ACTION: CITY COUNCIL LETTER Meeting of July 22, 2002 AGENDA Public Hearings ORIGINATING DEPARTMENT: CITY MANAGER SECTION: Fire APPROVAL ITEM: Close Hearing BY: Charlie Thompson Rental License Revocation DATE: July 16, 2002 DATE: NO: The matter of the revocation of the license to operate a rental unit(s) within the City of Columbia Heights against Russell Waletski regarding rental property at 4637-4639 Pierce Street for failure to meet the requirements of the Residential Maintenance Code was scheduled to commence at the City Council meeting of July 22, 2002. The public hearing on this property may now be closed in that the property owner has asked for and received an extension to complete the work on the outside of the building. RECOMMENDED MOTION: Move to Close the Public Hearing Regarding the Revocation or Suspension of the Rental License Held by Russell Waletski Regarding Rental Property at 4637-4639 Pierce Street in that the Property Owner has received a extension to complete the work on the outside of the building. COUNCIL ACTION: CITY COUNCIL L~TT~R Meeting of: July 22, 2002 AGENDA SECTION: ITEMS FOR CONSIDERATION - ORIGINATING DEPARTMENT: CITY MANAGER'S RESOLUTIONS AND ORDINANCES CITY MANAGER'S APPROVAL No: CONTROL OF THE CABLE TELEVISION FRANCHISE AND CABLE TELEVISION SYSTEM FROM AT & T CORPORATION TO AT & T COMCAST CORPORATION NO: AT & T Broadband (the Franchisee), a subsidiary of AT & T Corporation, currently has a non- exclusive cable television franchise with the City of Columbia Heights (Franchising Authority) to provide cable television service. As of December 19, 2001, AT & T, AT & T Broadband Corporation, Comcast Corporation, AT & T Broadband Acquisition Corporation, Comcast Acquisition Corporation, and AT & T Comcast Corporation have entered into an agreement and plan of merger. Under the merger agreement, AT & T Broadband Corporation's and Comcast Corporation's respective cable television systems will be combined into a new company incorporated in Pennsylvania as AT & T Comcast Corporation. The proposed transaction requires the prior written approval of the City of Columbia Heights (Franchising Authority), as the ultimate parent company will be different, and consequently, the ultimate ownership and control of the franchise will change as well. The entity actually holding the cable franchise in the City will not change as a result of the proposed transaction. On March 5, 2002, AT&T Corp. filed a Federal Communications Commission Form 394 with the Franchising Authority. The form, along with its attachments, contains certain promises, representations and warranties by AT&T Corporation, AT&T Broadband Corporation, Comcast Corporation and AT&T Comcast Corporation. Creighton, Bradley & Guzzetta, LLC ("CBG"), the Franchising Authority's cable television and telecommunications attorneys, were retained by the Franchising Authority to review AT&T Corp.'s FCC Form 394 and related information. In this regard, CBG and its subcontractor, Ashpaugh & Sculco, CPAs, PLC (~'A&S"), carefully analyzed the Form 394, as well as information furnished in response to data requests and information obtained through independent research, to determine whether: (i) AT&T Comcast Corporation possessed the requisite financial, technical, legal, character and managerial qualifications needed to control the cable franchise held by AT&T Broadband; and (ii) the proposed transaction would detrimentally impact services and rates. After completing its review, CBG determined that AT&T Comcast Corporation was not financially qualified to control the local franchise, and that the proposed transaction would have a negative impact on services and rates. CBG then issued a report to the Franchising Authority on May 31, 2002, in which it provided the bases for its conclusions, and recommended that the Franchising Authority deny AT&T Corp.'s transfer request. CBG's report included a report prepared by A&S on the financial aspects of the proposed AT&T Broadband/Comcast Corporation merger. Subsequent to the issuance of the CBG report, AT&T Corp. and Comcast Corporation asked for additional time in which to provide information to CBG related to the proposed transaction. To accommodate discussions with CBG, AT&T Corp. and Comcast Corp. extended to July 31, 2002, the deadline by which the Franchising Authority must act on the transfer application. CBG and AT&T Corp./Comcast Corporation met three times to discuss information submitted by the companies, and also held numerous telephone conferences. A&S was included in many of those meetings and discussions, and was consulted frequently about statements made by AT&T Corp./Comcast Corporation representatives and officials. After review by CBG and A&S of all documents, CBG issued a supplemental report on June 28, 2002, in which it reiterated its recommendation that the Franchising Authority deny AT&T Corp.'s transfer request. COUNCIL ACTION: CITY COUNCIL LETTER Meeting of: July 22, 2002 AGENDA SECTION: ITEMS FOR CONSIDERATION - ORIGINATING DEPARTMENT: CITY MANAGER'S RESOLUTIONS AND ORDINANCES CITY MANAGER'S APPROVAL NO: ITEM: ADOPT RESOLUTION 2002-48, GRANTING THE BY: LIN-DA L. MAGEE BY: CONSENT OF THE CITY TO THE TRANSFER OF DATE: 7-19-02 DATE: CONTROL OF THE CABLE TELEVISION FRANCHISE AND CABLE TELEVISION SYSTEM FROM AT & T CORPORATION TO AT & T COMCAST CORPORATION NO: At its meeting on July 18, 2002, the Telecommunications Commission reviewed the initial and supplemental reports on the proposed transaction prepared by CBG (see attached), and considered all relevant factors including (but not limited to) AT&T Comcast Corporation's financial, technical, legal, managerial and character qualifications, and the proposed transaction's impact on service and rates. After much discussion, the Telecommunications Commission passed a motion recommending that the City Council adopt a resolution approving, with conditions, the application of AT & T Corporation for approval of the transfer of control of the cable franchise of AT & T Broadband. RECOMMENDED MOTION: Move to waive the reading of Resolution No. 2002-48, there being ample copies available to the public. RECOMMENDED MOTION: Move to adopt Resolution No. 2002-48, a resolution granting the consent of the City of Columbia Heights, Minnesota to the Transfer of Control of the Cable Television Franchise and Cable Television System from AT & T Corporation to AT & T Comcast Corporation. COUNCIL ACTION: RESOLUTION NO. 2002-48 A RESOLUTION GRANTING THE CONSENT OF THE CITY OF COLUMBIA HEIGHTS, MINNESOTA TO THE TRANSFER OF CONTROL OF THE CABLE TELEVISION FRANCHISE AND CABLE TELEVISION SYSTEM FROM AT&T CORPORATION TO AT&T COMCAST CORPORATION WHEREAS, MediaOne of Columbia Heights, Inc., d/b/a AT&T Broadband ("Franchisee") holds a franchise (the "Franchise") to operate a cable television system ("the System") in Columbia Heights, Minnesota pursuant to Chapter 11 of the City Code, as amended (the "Franchise Ordinance") and is an indirect subsidiary of AT&T Corp. ("AT&T"); WHEREAS, after a series of transfers, Franchisee was approved by Columbia Heights, Minnesota ("City") as the Franchise holder, pursuant to prior transfer resolutions (the "Prior Transfer Resolutions"). The Prior Transfer Resolutions, the Franchise, and the Franchise Ordinance, together with any applicable resolutions, codes, ordinances, acceptances, acknowledgments, guarantees, amendments, memoranda of understanding, social contracts and agreements, are collectively referred to as the "Franchise Documents"; and WHEREAS, Franchisee is a wholly-owned subsidiary of AT&T Corp. ("AT&T"); and WHEREAS, AT&T, the ultimate parent corporation of Franchisee, and Comcast Corporation have agreed to combine AT&T's and Comcast Corporation's respective cable television systems in a new company incorporated in Pennsylvania as AT&T Comcast Corporation (the "Proposed Transaction"); and WHEREAS, under the Proposed Transaction, the Franchisee will continue to hold the Franchise and to operate the System, but Franchisee's ultimate parent company will be different and, consequently, the ultimate ownership of the Franchise will change as well; and WHEREAS, AT&T filed a copy of Federal Communications Commission Form 394, together with certain attached materials with the City on March 5, 2002, which materials more fully describe the proposed merger and which form, with its attachments, contains certain promises, representations and warranties by Franchisee, Comcast Corporation and AT&T Comcast Corporation (the "Transfer Application"); and WHEREAS, Franchisee, and Comcast Corporation, through its Comcast Cable Communications, Inc. subsidiary, provided written responses to some of the data requests issued by the City (the "Data Request ResponSe") and WHEREAS, Section 11.103(6)(B) of the Franchise Ordinance requires the City's prior consent to a fundamental corporate change, including a merger or a change in Franchisee's parent corporation; and WHEREAS, the City has reviewed the Transfer Application and considered all applicable and relevant factors; and WHEREAS, in reliance upon the representations made by and on behalf of Franchisee, Comcast Corporation, AT&T and AT&T Comcast Corporation, the City is willing to grant its consent to the Proposed Transaction, so long as those representations are complete and accurate; and WHEREAS, the City's approval of the Proposed Transaction is therefore appropriate if the Franchisee will continue to be responsible for all acts and omissions, known and unknown, under the Franchise Documents and applicable law for all purposes, including (but not limited to) Franchise renewal. NOW, THEREFORE, BE IT RESOLVED BY CITY COUNCIL OF THE CITY OF COLUMBIA HEIGHTS, MINNESOTA AS FOLLOWS: Section 1. The City's consent to, and approval of the Transfer Application is hereby GRANTED in accordance with the Franchise Ordinance, subject to the following conditions: 1.1 Neither the Franchise, nor any control thereof, nor the System, nor any part of the System located in the City's public rights-of-way or on City property, shall be assigned or transferred, in whole or in part, without filing a written application with the City and obtaining the City's prior written approval of such transfer or assignment, but only to the extent required by applicable law. 1.2 The City's approval of the Transfer Application is made without prejudice to, or waiver of, the City's right to fully investigate and consider during any future franchise renewal process: (i) Franchisee's financial, technical, and legal qualifications; (ii) Franchisee's compliance with the Franchise Documents; and (iii) any other lawful, relevant considerations. 1.3 The City's approval of the Transfer Application is made without prejudice to, or waiver of, any right of the City to consider or raise claims based on Franchisee's defaults, any failure to provide reasonable service in light of the community's needs, or any failure to comply with the terms and conditions of the Franchise Documents, or with applicable law. 1.4 The City waives none of its rights with respect to the Franchisee's compliance with the terms, conditions, requirements and obligations set forth in the Franchise Documents and in applicable law. The City's approval of the Transfer Application shall in no way to deemed a representation by City that the Franchisee is in compliance with all of its obligations under the Franchise Documents and applicable law. 1.5 After the Proposed Transaction, Franchisee will be bound by all the commitments, duties, and obligations, present and continuing, embodied in the Franchise Documents and applicable law. The Proposed Transaction will have no effect on these obligations. 2 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 After the Proposed Transaction is consummated, the Franchisee will continue to be responsible for all past acts and omissions, known and unknown, under the Franchise Documents and applicable law for all purposes, including (but not limited to) Franchise renewal to the same extent and in the same manner as before the Proposed Transaction. Nothing in this Resolution amends or alters the Franchise Documents or any requirements therein in any way, and all provisions of the Franchise Documents remain in full force and effect and are enforceable in accordance with their terms and with applicable law. The Proposed Transaction shall not permit Franchisee, or AT&T Comcast Corporation to take any position or exercise any right with respect to the Franchise Documents and the relationship thereby established with the City that could not have been exercised prior to the Proposed Transaction. The Franchisee will continue to abide by all terms of the Franchise Documents and applicable law after the Proposed Transaction, and will continue to assume the existing obligations, liabilities and responsibility for all acts and omissions under the Franchise Documents and applicable law, known and unknown, including (but not limited to) all acts and omissions of its predecessors in interest to the same extent as before the Proposed Transaction. The City reserves all of its rights with respect to Franchisee's future compliance with the terms, conditions, requirements and obligations set forth in the Franchise Documents. The City is not waiving any rights it may have to require franchise fee payments on present and future services delivered by Franchisee via the System. The City is not waiving any right it may have related to any open access issue. The City's approval of the Proposed Transaction and Transfer Application shall not constitute a waiver or release of any of the rights of the City under the Franchise Documents and applicable law, whether arising before or after the date of consummation of the Proposed Transaction. MediaOne Group, Inc., acknowledges that Franchisee will be responsible for performance of the obligations required by the Franchise Ordinance, and MediaOne Group, Inc., further acknowledges its obligations to take no action to prevent Franchisee from fulfilling its aforesaid obligations. MediaOne Group, Inc., assures that it will cause to be made available adequate financial resources to allow Franchisee to meet its current obligations under the Franchise Ordinance and enable Franchisee to maintain through 2005 the current operational and customer service levels taken as a whole. The Franchisee represents and warrants that the Proposed Transaction and the fact that as a result thereof AT&T Broadband and Comcast Corporation are thereby merged will not result in any increase in subscriber rates; provided, however, that 3 the Franchisee reserves the fight to make lawful changes in subscriber rates in the ordinary course of business. Section 2. If any of the conditions or requirements specified in this Resolution are not satisfied, then the City's consent to, and approval of, the Transfer Application and Proposed Transaction is hereby DENIED and void as of the date hereof. Section 3. The Franchisee shall reimburse the City in accordance with prior agreements with the Franchisee. The City will present a single invoice to the Franchisee itemizing the costs and expenses incurred. The Franchisee shall remit payment for such costs and expenses within thirty (30) days of its receipt of the invoice. Such payment shall be made directly to the City, and not through payment to any other entity. The Franchisee shall not assert its right to claim that the reimbursement made under this Resolution shall be considered a franchise fee. Section 4. If any of the oral or written representations made to the City by (i) the Franchisee, (ii) Comcast Corporation (iii) AT&T Comcast Corporation or (iv) any subsidiary or representative of the foregoing prove to be materially incomplete, untrue or inaccurate in any respect, it shall be deemed a material breach of the Franchise Documents and applicable law, including, without limitation, revocation or termination of the Franchise. Section 5. This Resolution shall not be construed to grant or imply the City Council's consent to any other transfer or assignment of the Franchise or any other transaction that may require the City's consent under the Franchise Ordinance, or applicable law. The City reserves all its rights with regard to any such transactions. Section 6. This Resolution is a final decision on the Transfer Application within the meaning of 47 U.S.C.§ 537. Section 7. The transfer of control of the Franchise from AT&T to AT&T Comcast Corporation shall not take effect until the consummation of the Proposed Transaction. Section 8. This Resolution shall be effectively immediately upon its adoption of the City. Adopted by the Columbia Heights City Council this 22nd day of July, 2002. Passed this 22na day of Offered by: Seconded by: Roll Call: Gary L. Peterson, Mayor Patricia Muscovitz, Deputy City Clerk/Council Secretary 4 Supplemental Report of Creighton, Bradley & Guzzetta, LLC Relating to the FCC Forms 394 and Related Materials Filed by AT&T Corp. and Comcast Corporation Crei~,, Bradley.. Guzzetta, LLC (-kmmu~,fications Law Thomas D. Creighton Michael R. Bradley Stephen J. Guzzetta 5402 Parkdale Drive, Suite 102 Minneapolis, MN 55416 (952) 543-1400 (Voice) (952) 543-8866 (Fax) June 28, 2002 CONTEXT Minneapolis Star Tribune Editorial, June 27, 2002, discussing the WorldCom financial collapse: ... There is a common thread in much of this: unbridled corporate growth. Tyco, WorldCom, Global Crossing, Em'on and Qwest are all examples of this. All were relatively small companies that became giants by gobbling up other firms, going deeply in debt at the same time. Then most used illicit accounting practices to disguise debt, inflate earnings and drive up stock prices.~ Their accountants let them do it, and regulators were asleep at the switch. Investors, especially large institutional investors, have some culpability in this as well. Few asked essential, hard questions about how these companies really made their money. (Emphasis added.) BACKGROUND Creighton Bradley & Guzzetta LLC ("CBG"), in consultation with Ashpaugh & Sculco, CPAs, PLC ("AS"), have been retained by numerous local franchising authorities ("LFAs") to evaluate the FCC Form 394s submitted to the LFAs relative to the proposed merger ("merger") of AT&T Broadband and Comcast Corporation (the "companies"). A report was issued by CBG on May 30, 2002, the conclusion of which was a recommendation to the LFAs that they deny the companies' request for approval of the merger. The original deadline alleged by the companies for conclusion of all consideration by the LFAs was early July, 2002.2 As a result, the LFAs scheduled the meetings necessary to consider the report of CBG. The companies requested the opportunity to respond to the CBG report in more detail than the time allowed and extended the deadlines (ultimately) for consideration by the LFAs generally until July 31, 2002.3 "FEW ASKED ESSENTIAL, HARD QUESTIONS ABOUT HOW THESE COMPANIES REALLY MADE THEIR MONEY" MINNEAPOLIS STAR TRIBUNE EDITORIAL, June 27, 2002 Not CBG and AS; CBG and AS started asking the hard questions even before receipt of the FCC Form 394s. In anticipation of the rumored merger, CBG and AS submitted preliminary questions to the companies. From the inception of our analysis, we were concerned with focusing on the financial ramifications of the merger. A proposed merger of the magnitude of $60 billion dollars, in I NO illicit accounting has been identified in our analysis. 2 The LFAs assert that due to the incompleteness of the applications, the 120-day review period has not commenced. 3 The final date for consideration by The Metropolitan Government of Nashville and Davidson County ("Metropolitan Government") was extended until August 7, 2002, although, as indicated in footnote 2, the Metropolitan Government maintains that the federal 120-day review period has not commenced. ~ AT&T Comcast Transfer Application 1 Supplemental Report Page Creighton Bradley & Guzzetta, LLC June 28, 2002 our opinion, required an in-depth financial analysis. Also from the inception of our inquiry, the companies have refused to provide us with AT&T/Comcast-prepared financial projections for the new merged entity in such essential areas as projected revenues and the assumptions underlying those projections, projected expenses and the assumptions underlying those projections, and cash flow projections. We determined from the outset that a debt load of the magnitude we anticipated would necessitate a careful analysis of the financial operations of the proposed merged company on a going forward basis. As of today, we have still not been supplied with projections generated by Comcast or AT&T. Instead, we have been provided only Wall Street analysts' presumptions as to how said analysts guess the merged company might operate from a financial perspective. In addition to the initial questions to the companies, CBG submitted two other full sets of inquiries dated March 15, 2002 and April 2, 2002. Both inquiries are available for review, but suffice it to say that CBG and AS were insistent that AT&T and/or Comcast has an obligation to provide the LFAs with some form of a demonstrated analysis of the financial operations of the systems on a going forward basis, and, even more importantly, to provide the LFAs with assumptions upon which AT&T/Comcast had based their multilevel assertions that the merged company would experience financial good health. Although, then and now, extensive information has been provided regarding debt loads and sources of debt, AT&T and Comcast have still failed to provide any company-generated financial information that would allow CBG and AS to test the AT&T Comcast business model for a reasonable period after the effective date of the proposed merger, test the assumptions supporting that model, and analyze the impact of the business model (revenues and expenses) on the LFAs and the subscribers they represent. SERIOUS BUSINESS This is serious business; CBG and AS both took their analysis very seriously. Both CBG and AS read and reviewed every document supplied by both parties to this proposed merger. Further, both parties, as well as numerous other individuals, participated in countless face-to-face and telephone conferences and e-mail exchanges of insight and information. Wall Street analysts whose reports are oft sited by the companies even waded in with opinions and oral insights. The LFAs can be assured that no stone was left unturned, if the companies would agree to provide the stone. Even when not provided, numerous other information sources at our disposal were consulted in an effort to understand how AT&T and Comcast might make this merged company work. The record exists. It is impossible and far beyond the scope of your responsibility to review every page yourself. That is why you have retained us. ~l~ AT&T Comcast Transfer Application 2 Supplemental Report Page Creighton Bradley & Guzzetta, LLC June 28, 2002 THIS SUPPLEMENTAL ANALYSIS WILL NOT LIST EVERY PIECE OF PAPER SUPPORTING EVERY INSIGHT Neither CBG nor AS feels the need at this point to impress the reader with just how well we read each piece of paper. We have no intention of listing, line by line, every piece of paper which might support every insight we might have. A list of every document that compiles a record of our review exists. We have no need to paper the record further, delineating everything here that we have learned. There is no need here to make an attempt to show how much smarter or how much more correct we are than the companies' representatives. The LFAs will have ample time to hear the details of our alleged insanity laid out for them by the companies. In addition to the material which was well prepared and presented by local company representatives since the issuance of our May 30, 2002 Report, the companies chose to shower upon CBG and AS copies of a small collection of other consultant reports from across the country that we presume the company assumed supported their position. A careful review of those reports, however, demonstrates that they did not delve as deeply into the financial issues as did the CBG/AS analysis, and virtually all expressed significant concern regarding many of the same financial problems as we have attempted to flush out. In essence, the reports tended to support our financial concerns. We have also been deluged with reports from major financial analysts in the private sector. The company has provided an 81-page report prepared by Morgan Stanley dated May 3, 2002, and titled "Analyzing the AT&T Broadband/Comcast Merger." In addition, we have been provided or have obtained copies of the review of the proposed merger by Sanford Bernstein and reviews of the cable television industry in general by Bear Sterns, Merrill Lynch and Sanford Bernstein. Suffice it to say, in conclusory terms for the purpose of this supplement to our May 30, 2002 Report, that although some minor details or concerns from our initial review have been cleared up (the details of the Bresnan transfer, for example) and some other details as to anticipated debt have been offered by the companies from another perspective, none of that additional information or the accompanying explanation has changed our conclusion in our Report of May 30, 2002. The fatal flaw in the support of the application from AT&T and Comcast remains -- Comcast's and AT&T's steadfast refusal to produce a business plan from which the LFAs can extrapolate a picture of the potential for harm to subscribers and the LFAs as a result of this transaction. Our initial conclusion (see page 18 of CBG initial report) remains -- as a result of the assumptions we are forced to make or due to the lack of any operating assumptions presented by the companies, this transaction has the highest possibility of causing detriment to subscribers of any we have reviewed, and certainly a high enough possibility of detriment so as to support a decision of an LFA to deny this application for approval of this proposed merger. / ~ Application Supplemental Report Page 3 I AT&T Comcast Transfer Creighton Bradley & Guzzetta, LLC June 28, 2002 DOWN-HOME, LAY-PERSON-UNDERSTANDABLE TALK Frankly, after conducting the most extensive analysis undertaken in our careers, if we were to present the picture offered by AT&T and Comcast of this merger in a down-home, lay-person- understandable way as it relates directly to the issues of serious concern to the local franchising authorities, what follows would be that picture: The merged company will be saddled with $32 billion dollars of debt. The companies, even accepting a best-case scenario, have explained that they might be able to pay down that debt by selling AT&T's interest in Time Warner Entertainment, by dumping already monetized ownership interests in securities, by selling other systems, and by conducting a few minor other revenue generating sales. As for ongoing system operations (directly affecting the local subscribers), they (and Wall Stree0 would ask you to rely upon the simple fact that the merged company will be led by Mr. Brian Roberts (head of Corneas0 who is a very talented man. They (and Wall Street) assert that the companies are in a great business where people buy stuffthey sell and probably will buy more of it at higher prices. Further, the companies think they can combine some existing duplicative operations and save some money which is currently being spent by each of the AT&T and Comcast operations functioning separately. The companies explain that there will be enough revenue counter-balancing expenses so that the whole thing works. In response to our inquiry for details as to how they will pull this off, the companies make clear that any such questions are either none of our business, beyond our legal scope to even ask such things or beyond their legal obligation to answer the questions. To further clarify the simple statements above, we might even add narrative (in parentheses) below: The merged company will be saddled with $32 billion dollars of debt. (Various estimates, depending on who is considering what, range around $31 to $33 billion, but what's a billion dollars here or there?) The companies, even accepting a best-case scenario, have explained that they might be able to pay down that debt by selling AT&T's interest in Time Warner Entertainment, (Much attention has been paid to the Time Warner Entertainment ("TWE") piece. Considerable additional information has been offered by company representatives regarding the monies to be realized by such a sale. Estimates of income from such a sale (after tax) range around $6 to $6.5 billion dollars. It is now speculated on Wall Street that the TWE investment may not be monetized as originally set forth in the Form 394 and the S-4. Instead, it is believed that the TWE investment will be traded for subscribers/cable television franchises. This impact would be that AT&T Comcast's amount of long-term debt would not be reduced by the after-tax proceeds of the sale of TWE and AT&T Comcast would have additional systems to include under its umbrella. Since this is only speculation, as was the discussion of AT&T Comcast monetizing the TWE investment, we are unable to provide any information on the impact to AT&T Comcast operations by such an asset transfer. In addition, we do not know how exchanging the TWE investment for subscribers/cable television franchises will impact the original agreement with AT&T Corporation concerning disposition of TWE.) by dumping already monetized ownership interests In I/1 Application Supplemental Report Page 4 AT&T Comcast Transfer Creighton Bradley & Guzzetta, LLC June 28, 2002 securities (although still not guaranteed, we concur that this option is available), by selling other systems, (no plan or anticipated final revenues were presented for this option) and by conducting a few minor other revenue generating sales (nothing in this category affected the conclusions of our Report). As for ongoing system operations (directly affecting the local subscribers), they (and Wall Street) would ask you to rely upon the simple fact that the merged company will be led by Mr. Brian Roberts (head of Comcast) who is a very talented man. (Mr. Roberts has an excellent reputation as the head of a telecommunications empire. Our report assumes the head of the company is qualified, but we were unable to assume that he may also be a magician. Without data suggesting he or anyone in his organization had even projected what revenues they might expect and what expenses they might be faced with, it is not possible to assume success by his fortitude and personality alone.) They (and Wall Street) assert that the companies are in a great business (while there is no debate that telecommunications is an important business, there is also no dispute that the telecommunications industry has faced difficult and challenging financial times. Without a well thought out plan by Comcast or AT&T as to the going forward business plan for the company as ultimately expressed at the local level, "business greatness" does not an approval make) where people buy stuffthey sell and probably will buy more of it at higher prices (we believe this to be one of the most reckless and dangerous assumptions by the companies and Wall Street without well thought out projected expense and revenue plans founded on reasonable and verifiable assumptions). Further, the companies think they can combine some existing duplicative operations and save some money which is currently being spent by each of the AT&T and Comcast operations functioning separately (we repeatedly asked for an explanation of the economies of scale that Comcast or AT&T factored into the going forward business plan of the companies. We were only provided with Wall Street analysis of where a new company such as this could cut comers by combining duplicative functions). The companies explain that there will be enough revenue counter-balancing expenses so that the whole thing works (not one ounce of company ink was shed to present a single line ora company-prepared business plan that included projected expenses at the system level and the assumptions supporting those expense projections, projected revenues at the system level and the assumptions supporting those revenue projections, and projected cash flow assumptions and calculations4). In response to our inquiry for details as to how they will pull this off, the companies made clear that any such questions are either none of our business, beyond our legal scope to even ask such things or beyond their legal obligation to answer the questions (this approach of supplying information did not help the open and free communication on issues of importance to the LFAs). 4 Comcast has informed CBG and AS that no such business plan has been created by Comcast. Either this is untrue, making this a prima facie reason for denial of the transfer, or it is true, asking the LFAs to just approve a proposed multi- billion dollar merged company which plans apparently to commence business with no knowledge of revenues and expenses that it either expects or needs for success. Such an assertion is astonishing. /~ Application Supplemental Report Page 5 AT&T Comcast Transfer Creighton Bradley & Guzzerta, LLC June 28, 2002 IS THIS PROCESS JUST A SHAM OR A RUBBER STAMP? To listen to the Wall Street pundits, the newspaper writers and even the companies, it is inconceivable that some ordinary policymaker could even understand this proposed $60 billion dollar transaction, let alone deny it. After all, great minds with great experience and even greater amounts of money think the proposed transaction is a wondrous opportunity to unite a couple of the largest telecommunications companies in the world. Missing from that analysis is the stark unforgiving fact that all LFAs' franchises, and therefore federal law, and Minnesota and Wisconsin state laws, require unequivocally that a local franchise authority must review and approve any such transaction before it can become effective as to that local franchising authority. Extensive research at all levels of government by CBG has not uncovered any requirement that no such review should even be attempted if the deal is worth $60 billion dollars. Stated less facetiously, if the multilevel legal requirement of review and consent by local authorities means anything, then it must encompass the possibility that such review could result in approval or denial of the request to change control or ownership. Any other conclusion would make the legally required process nonsensical. Additionally, the LFAs are aware that in situations of such an application to a legislative body, the deliberative body is required to approve the application unless there exists some reasonable basis upon which it could base any ultimate denial. The process employed by the LFAs must comport with the federally prescribed process, which springs from the local or state processes except where preempted as to timelines and related procedural steps, and must not otherwise in its application be arbitrary or capricious. The process, therefore, is a terribly significant one. The participation of the LFAs in the process is recognized at all levels of government as penultimate for any proposed transfer of control or ownership. A denial of any such request is also final, subject to refiling, but for judicial review of only the most limited nature. Remedies for companies who might disapprove of a decision of an LFA are limited to injunctive or declaratory relief by 47 USC § 555a. Assuming the absence of arbitrary or capricious decision making, and assuming the existence of a reasonable basis for any such decision, the decision of the LFA is determinative as to that particular franchise. MAY 30, 2002 The Report of CBG of May 30, 2002 recommended that the LFAs deny the application for approval of the proposed merger (said Report is incorporated herein by reference and available at www.creightonbradley.com). The primary basis for the recommendation was significant concern raised by the financial analysis of the proposed merger conducted by AS and further reviewed by CBG. /~l~ AT&T Comcast Transfer Application Page 6 Supplemental Report Creighton Bradley & Guzzetta, LLC June 28, 2002 After the issuance of the CBG Report, CBG openly and freely encouraged the companies to review the Report and point to each and every fact or conclusion in the Report for which the companies chose to supply additional information or simply to challenge. The ensuing weeks provided an opportunity for the companies to present additional information.~ Our observations regarding some specific information items are found elsewhere in this Report. However, a general response to this after-report information is pertinent. First, virtually all of the substantive information supplied after May 30, 2002, had already been reviewed by both CBG and AS. Some "new" detail for previously received information had been requested from the inception of the analytical process and was subsequently provided. Of the "new" information provided, the majority of the information was the submission of reports from analysts from outside Comcast and AT&T, although not all independent.6 CONCLUSION All information provided to CBG and AS by the applicants herein as of the date of this Supplemental Report has been reviewed on behalf of the LFAs. This additional information does not alter the views presented in our initial Report. AT&T Comcast's continual response to LFAs and to Wall Street is that Comcast should be trusted to be able to make this merger work to the benefit of all. Based on our review, we find no reason to change our report of May 30, 2002. ~ In order to provide for the reasoned analysis of all information, the companies were given the unrestricted opportunity to provide and to allow that analysis within the federally mandated (and extended) timelines, the "record" was closed on June 26, 2002. 6 CBG must note that the cooperation and information provided by local representatives of both AT&T and Comcast was second to none. Timely and appropriate responses were provided to our concerns. Nothing could be done by local representatives to remedy the ultimate fatal flaw of the complete absence of any going forward business plan as discussed later in this Supplemental Report, as well as the May 30, 2002 Report. For either company to attempt to place blame for these conclusions on any local representative would be tantamount to "shooting the messenger" when it was in fact "corporate" that shot itself in the foot. /~l~ AT&T Comcast Transfer Application Supplemental Page 7 Report Creighton Bradley & Guzzetta, LLC June 28, 2002 Report of Creighton, Bradley & Guzzetta, LLC Relating to the FCC Forms 394 and Related Materials Filed by AT&T Corp. and Comcast Corporation Guzzetta, LLC Thomas D. Creighton Michael R. Bradley Stephen J. Guzzetta 5402 Parkdale Drive, Suite 102 Minneapolis, MN 55416 (952) 543-1400 (Voice) (952) 543-8866 (Fax) May 30, 2002 I. INTRODUCTION This Report is prepared on behalf of the following local franchising authorities: Minnesota: the Bumsville/Eagan Telecommunications Commission (Cities of Burnsville and Eagan); the North Metro Telecommunications Commission (Cities of Blaine, Centerville, Ham Lake, Spring Lake Park, Lino Lakes, Ham Lake, and Lexington); the Central St. Croix Valley Joint Cable Communications Commission (Cities of Stillwater, Bayport, Baytown Township, Oak Park Heights and Stillwater Township); the City of Columbia Heights; the City of Coon Rapids; the City of Gem Lake, the North Suburban Cable Communications Commission (Cities of Roseville, New Brighton, St. Anthony, Lauderdale, North Oaks, Mounds View, Arden Hills, Shoreview, Little Canada, and Falcon Heights); the Quad Cities Cable Communications Commission (Cities ofAnoka, Champlin, Andover, and Ramsey); the Ramsey Washington Counties Suburban Cable Commission (Cities of Maplewood, Oakdale, White Bear Lake, White Bear Township, Dellwood, Birchwood, Grant, Lake Elmo, Mahtomedi, North St. Paul, Vadnais Heights and Willemie); and the South Washington County Telecommunications Commission (Cities of Woodbury, Cottage Grove, Newport, St. Paul Park and Denmark Township). Tennessee: the Metropolitan Government of Nashville and Davidson County ("Metropolitan Nashville"); the City of Murfreesboro; and the Town of Smyrna. Wisconsin: the City of River Falls; and the City of Prescott. The local government entities listed above are collectively referred to herein as the "LFAs" or singularly as an "LFA." The LFAs' local cable television franchises are collectively referred to herein as "Franchises" or singularly referred to as a "Franchise"). This transaction involves a merger of the ownership interests of the parent companies of the companies holding the Franchises of the LFAs. On December 19, 2001, Comcast Corporation agreed to acquire AT&T Corp.'s AT&T Broadband subsidiary in a transaction initially Valued at $72 billion. AT&T Corp. ("AT&T"), AT&T Broadband Corp. ("ATTB"), AT&T Broadband Acquisition Corp., Comcast Acquisition Corp. and Comcast Corporation ("Comcast") have entered into an agreement to merge ATTB and Comcast, as separate entities, under a new parent corporation called AT&T Comcast Corporation ("AT&T Comcast") (the transaction herein referred to as the "Transaction"). The proposed merger and resulting transfer of control will result ~om the spin-off of ATTB, a AT&T Comcast Transfer Application Page 1 Report Creighton Bradley & Guzze~ta, LLC May 30, 2002 holding company for AT&T's broadband division, to AT&T's shareholders, and the subsequent merger of ATTB and Comcast into wholly-owned subsidiaries of AT&T Comcast. After the merger is consummated, existing AT&T shareholders will hold 55 percent of the economic interest and between 57 and 61 percent of the voting interest of AT&T Comcast; existing Comcast shareholders will hold 39 pement of the economic interest and between 1 and 5 percent of the voting interest of AT&T Comcast; and Brian L. Roberts will directly or indirectly hold approximately 1.5 percent of the economic interest and approximately 33 percent of the voting interest of AT&T Comcast. AT&T and Comcast represent that the Transaction will also have the following characteristics: · The existing, indirect wholly-owned subsidiaries of AT&T and Comcast holding the Franchises before the Transaction will continue to hold the Franchises after the Transaction. The Transaction will not affect any current obligations under the Franchises. After the Transaction, the franchise holder in each LFA will be bound by its Franchise obligations in the same manner and to the same extent as before the Transaction. AT&T Comcast anticipates retaining most of each franchise holder's local personnel, including management and technical personnel. Thus, the level of local expertise and experience currently available should not be diminished by the Transaction. · No changes to each franchise holder's current service policies and practices are required, planned or anticipated as a result of the Transaction. The purpose of this report is to provide the LFAs with an understanding of the Transaction, the standard for review, and our analysis and conclusions. II. THE EVALUATION PROCESS The LFAs received an FCC Form 394 from either AT&T or Comcast, through their subsidiaries (AT&T Broadband and Comcast Cable Communications, Inc. ("Comcast Cable")), on or about March 5, 2002. The Forms 394 lay out the Transaction, as described above and in greater detail below. Since the Transaction would result in a total change of control over the Franchises, the prior approval of the LFAs must be obtained, in accordance with the terms of the Franchises and/or applicable law. In the process of evaluating the FCC Forms 394, CBG, on behalf of the LFAs, has done the following: /~1~ AT&T Comcast Transfer Page 2 Application Report Creighton Bradley & Guzzetta, LLC May 30, 2002 Retained Ashpaugh & Sculco, CPAs, PLC ("A&S") to examine AT&T Comcast's financial qualifications, and the proposed merger's impact on services and rates; Issued an initial data request to AT&T Broadband on March 4, 2002, on behalf of all the Minnesota LFAs, except Gem Lake, which request solicited certain financial information regarding the Transaction (Data Request #1); Issued an initial data request to AT&T Broadband and Comcast Cable on March 15, 2002, on behalf of Gem Lake, the Wisconsin LFAs and the Tennessee LFAs, which request solicited certain financial information regarding the Transaction ("Data Request #2"); Drafted and transmitted a letter to AT&T Broadband, on behalf of the Minnesota and Wisconsin LFAs, informing it that the transfer process set forth in Section 617 of the Cable Communications Policy Act of 1984, as amended, 47 U.S.C. § 537, preempts the transfer process specified in state law; Reviewed the FCC Forms 394 for completeness and transmitted a notice of incompleteness to both AT&T Broadband and Comcast Cable on March 29, 2002, which notice, among other things, informed AT&T Broadband and Comcast Cable that the federal 120-day review period had not begun due to the incompleteness of the information received thus far; Informed AT&T Broadband and Comcast Cable by letters transmitted in March and early April, 2002 (depending on the LFA involved), that the LFAs must be reimbursed for all costs incurred in reviewing the FCC Forms 394, and associated documents, and in preparing a report, recommendation and resolutions or ordinances; Negotiated complete reimbursement of the LFAs' transfer-related expenses with a representative of AT&T Broadband and Comcast Cable; Reviewed AT&T Broadband's and Comcast Cable's responses to Data Request #1 and Data Request #2, and prepared a third data request, dated April 2, 2002, soliciting information on AT&T Comcast's financial, technical, legal, character and managerial qualifications ("Data Request #3"); Analyzed AT&T Broadband's and Comcast Cable's response to Data Request #3; Independently researched information about the proposed transaction and arguments raised by AT&T Broadband and Comcast Cable in the course of reviewing the FCC Forms 394; AT&T Comcast Transfer 3 Application Report Page Creighton Bradley & Guzzetta, LLC May 30, 2002 Drafted a letter, dated May 6, 2002, notifying AT&T Broadband and Comcast Cable that the terms of the proposed merger had materially changed and that the company's transfer applications remained incomplete; For the Minnesota and Wisconsin LFAs and Metropolitan Nashville and Davidson County, prepared a written response to AT&T Broadband's/Comcast Cable's correspondence concerning the incompleteness of the companies' applications; Evaluated the impact of the Transaction on competition in the delivery of cable service and services and rates, based on information provided by AT&T Broadband, Comcast Cable and A&S, and information obtained through independent research; and Assessed AT&T Comcast's financial, technical, legal, managerial and character qualifications, using data furnished by AT&T Broadband, Comcast Cable and A&S, and information obtained through independent research. All of the documents referenced above are incorporated herein as if a part hereof. Copies of each document are available for review from CBG, except those documents which are protected from disclosure under applicable law. CBG's conclusions concerning AT&T Comcast's financial, technical, legal, managerial and technical qualifications, and the impact of the proposed merger on competition, subscriber rates and services, are set forth in detail below. IlL APPLICABLE FEDERAL~ STATE AND LOCAL LEGAL REQUIREMENTS The applicable legal requirements for examining a request for approval of the Transaction may be found at the federal, state and local level. A. Federal Law. The Cable Communications Policy Act of 1984, as amended, 47 U.S.C. § 521, et seq. (the "Federal Cable Act"), and the Federal Communications Commission's regulations do not establish substantive standards for approving or rejecting a transfer application. Section 617 ofthe Federal Cable Act, 47 U.S.C. § 537, and 47 C.F.R. § 76.502, however, contain certain mandatory procedures that the LFAs must follow. In this regard, § 537 requires a local franchising authority to act within 120 days of receipt of a completed FCC Form 394 that includes all information required by the franchising authority's franchise and state and local law. A local franchising authority and a transfer applicant may agree to extend the 120-day deadline provided for in federal law and Federal Communications Commission regulations. Absent an extension of time, ifa local franchising authority does not act AT&T Comcast Transfer Page 4 Application Report Creighton Bradley & Guzzetta, LLC May 30, 2002 within 120 days, an applicant's transfer request will be deemed approved. Although federal law is primarily procedural with regard to transfers of ownership and control, the Federal Cable Act does delineate two grounds on which a franchising authority may deny a transfer request. See 47 U.S.C. § 533(d). First, a transfer application may be denied if the proposed transferee owns or controls another cable system in the franchise area. Second, a local franchising authority may reject a transfer if the proposed transaction would eliminate or reduce competition in the delivery of cable service. B. State and Local Law. State and local law typically establish the substantive legal bases for granting or denying a transfer request, and often set forth the applicable standard of review. In many cases, the LFAs' Franchises or an LFA's municipal cable ordinance may delineate specific grounds that may be used, and specific factors that must be considered. In addition, state statutes and court decisions may list criteria that must be considered or may establish standards that must be followed. In some cases, state law may also prescribe additional procedures that must be followed by LFAs. Tennessee Law -- Murfreesboro and Smyrna Tennessee state statutes do not contain any substantive standards or requirements governing a LFA's analysis of this Transaction. Thus, unless restricted by the terms of a Franchise, LFAs in Tennessee should have broad discretion when it comes to reviewing and acting on a transfer application, provided the LFAs do not act arbitrarily or capriciously. Neither Murfreesboro's nor Smyma's local ordinances contain any substantive limitation on the LFAs' authority to evaluate, approve or deny a transfer request, although the ordinances do define the types of transactions for which prior approval is required. More specifically, neither Franchise limits the subjects that may be reviewed in connection with a defined transfer or restrict the permissible bases for approval or denial of a transfer application. Tennessee Law- Metropolitan Government of Nashville and Davidson County The Metropolitan Nashville analysis incorporates the comments above regarding Tennessee state law requirements. As for local law, § 6.08.140 of the Metro Code does not contain any substantive limitation on Metropolitan Nashville's authority to evaluate, approve or deny a transfer request. I More specifically, § 6.08.140 does not the limit subjects that may be reviewed in connection with a transfer. Indeed, § 6.08.140(B)(3) specifies that "[flor the purposes of determining whether it shall consent to a transfer, metropolitan Nashville or its agents may inquire into all financial, technical and 1 Chapter 6.08 of the Metro Code does, however, define the types of Wansactions for which local approval must be sought. See § 6.08.020 of the Metro Code, defining the concept ofa '~ransfer." AT&T Comcast Transfer Page 5 Application Report Creighton Bradley & Guzzetta, LLC May 30, 2002 legal qualifications of the prospective transferee and such other relevant matters as metropolitan Nashville may reasonably deem necessary to determine whether the transfer is in the public interest and should be approved, denied, or conditioned." Moreover, the Metro Code does not restrict the permissible bases for approval or denial of a transfer application, although it does list specific factors that must be considered. Those factors, however, are not exclusive. They are: (i) the legal, financial, and technical qualifications of the transferee to operate the system; (ii) any potential impact of the transfer on subscriber rates or services; (iii) whether the incumbent franchisee is in compliance with its franchise agreement and Chapter 6.08 of the Metro Code and, if not, the proposed transferee's commitment to cure such noncompliance; (iv) whether the transferee owns or controls any other cable system in Metropolitan Nashville, and whether operation by the transferee may eliminate or reduce competition in the delivery of cable service in Metropolitan Nashville; and (v) whether operation by the transferee or approval of the transfer would adversely affect subscribers, Metropolitan Nashville's interest under Chapter 6.08, the franchise agreement, other applicable law, or the public interest, or make it less likely that the future cable-related needs and interests of the community would be satisfied at a reasonable cost.2 Minnesota Statutes and Specific Local Franchise Ordinances Pursuant to Minn. Stat. § 238.083, Subd. 4, local franchising authorities must not unreasonably withhold their consent to a proposed sale or transfer of a Franchise, including a sale or transfer by means of a fundamental corporation change? Stated differently, state law establishes a substantive standard, which requires that LFAs must have a reasonable basis to withhold approval ora proposed sale or transfer of a Franchise. It should be noted that § 238.083 does not limit the issues or qualifications that may be investigated in the context of such an analysis, or otherwise delineate the grounds on which a denial can be based. Thus, unless restricted by the terms of a Franchise, Minnesota LFAs have broad discretion in reviewing this Transaction. None of the Minnesota LFAs' Franchises contain any limitation on the subjects that may be reviewed in connection with an analysis of this Transaction, nor do any of the Franchises contain limitations on permissible bases for the approval or denial of this Transaction. That said, the Franchises for Columbia Heights, the South Washington County Telecommunications Commission and the member cities of the North Metro Telecommunications Commission reiterate that approval of the application at issue in this review cannot be unreasonably withheld. 2 See § 6.08.140(C)(1) of the MeUo Code. 3 Minn. Stat. § 238.083, Subd. I del'roes a "fundamental corporate change" as "the sale or transfer of a majority of a corporation's assets; merger, including a parent and its subsidiary corporation; consolidation; or creation ora subsidiary corporation." AT&T Comcast Transfer Application Report Page 6 Creighton Bradley & Guzzetta, LLC May 30, 2002 Aside from the substantive standard discussed above, Minn. Stat. § 238.083 contains certain procedural requirements pertaining to the sale or transfer of cable television franchises. More specifically, § 238.083 states: Subd. 2. Written approval of franchising authority. A sale or transfer of a franchise, including a sale or transfer by means of a fundamental corporate change, requires the written approval of the franchising authority. The parties to the sale or transfer of a franchise shall make a written request to the franchising authority for its approval of the sale or transfer. The franchising authority shall reply in writing within 30 days of the request and shall indicate its approval of the request or its determination that a public hearing is necessary if it determines that a sale or transfer of a franchise may adversely affect the company's subscribers. The franchising authority shall conduct a public hearing on the request within 30 days of that determination. Subd. 3. Notice of hearing. Unless otherwise already provided for by local law, notice of the hearing must be given 14 days before the hearing by publishing notice of it once in a newspaper of general circulation in the area being served by the franchise. The notice must contain the date, time, and place of the hearing and must briefly state the substance of the action to be considered by the franchising authority. Subd. 4. Approval or denial of transfer request. Within 30 days after the public hearing, the franchising authority shall approve or deny in writing the sale or transfer request. The approval must not be unreasonably withheld. The franchise ordinances adopted by the City of Columbia Heights, the South Washington County Telecommunications Commission and the member cities of the North Metro Telecommunications Commission reiterate the same procedural requirements. In contrast to state law and the Franchises identified above, the transfer provisions of the Federal Cable Act, as amended, provide that: A franchising authority shall, if the franchise requires franchising authority approval of a sale or transfer, have 120 days to act upon any request for approval of such sale or transfer. If the franchising authority fails to render a final decision on the request within 120 days, such request shall be deemed granted unless the requesting party and the franchising authority agree to an extension of time. 47 U.S.C. § 537. According to the Federal Cable Act, any provision of state or local law, which is "inconsistent" with Title VI (Cable Communications) is deemed to be preempted and superseded. 47 U.S.C. § 556(c). AT&T Comcast Transfer Application Page 7 Report Creighton Bradley & Guzzetta, LLC May 30, 2002 Accordingly, CBG has determined that federal law preempts any provision of state or local law that would require LFAs to meet certain procedural deadlines prior to rendering a final decision regarding a transfer request. In short, the federal fight to a 120-day review period cannot be eviscerated by a failure to meet inconsistent state or local procedural requirements. AT&T Broadband does not concur that federal law preempts the applicability of the procedural deadlines and steps set for in § 238.083. That said, AT&T Broadband has agreed not to assert any violation of state procedural steps or timing deadlines, as long as final action is taken on its applications within the 120-day deadline specified in federal law. Wisconsin Statutes and Specific Local Franchise Ordinances Pursuant to Wis. Stat. § 66.082(5)(a), Wisconsin .LFAs may not withhold approval of this Transaction without "good cause." It should be noted, however, that § 66.082(5)(a) does not limit the issues or qualifications that may be investigated in the context of this Transaction, or otherwise delineate the grounds on which a denial can be based. Thus, unless restricted by the terms of a Franchise, Wisconsin LFAs have broad discretion when it comes to reviewing, approving or denying this Transaction. None of the Wisconsin LFAs' Franchises contain any limitation on the subjects that may be reviewed in connection with this Transaction, nor is there any limitation on the permissible bases for approval or denial of this Transaction. Aside from the substantive standard discussed above, Wis. Stat. § 66.082(5)(a) contains certain procedural requirements pertaining to this Transaction. More specifically, Wis. Stat. § 66.082(5)(a) states: A cable operator shall give the municipality that authorized its franchise at least 90 days' advance written notice of the cable operator's intention to transfer ownership or control of a cable television system. During the term of a franchise agreement, a cable operator may not transfer ownership or control of a cable television system without the approval of the municipality that authorized the franchise. A municipality may not withhold approval of an ownership transfer or a transfer of control without good cause. If a heating is necessary to determine ifa transfer may have an adverse effect, a municipality may schedule a heating to take place within 45 days after the date on which the municipality receives the notice. If a municipality withholds approval of an ownership transfer or a transfer of control, the municipality shall state its objections to the transfer in writing within 60 days after the date on which the municipality receives the notice. Wis. Stat. § 66.082(5)(a). The state's default review period and procedures, however, "may be varied under a written franchise AT&T Comcast Transfer Page 8 Application Report Creighton Bradley & Guzzetta, LLC May 30, 2002 agreement that is entered into, renewed, extended or modified after May 14, 1992." Wisc. Stat. § 66.082(5)(c). In this regard, the Wisconsin LFAs' Franchises, which have been renewed since 1992, state: "[t]he City shall have such time as is permitted by federal law in which to review a transfer request." Federal law specifies that: A franchising authority shall, if the franchise requires franchising authority approval of a sale or transfer, have 120 days to act upon any request for approval of such sale or transfer. If the franchising authority fails to render a final decision on the request within 120 days, such request shall be deemed granted unless the requesting party and the franchising authority agree to an extension of time. 47 U.S.C. § 537. Thus, pursuant to state and local law, the Wisconsin LFAs have 120 days in which to analyze AT&T's FCC Forms 394 and any materials requested pursuant to or required by the LFAs. C. Procedural Issues. The LFAs received AT&T's and Comcast's transfer applications on or about March 5, 2002. If the applications were complete, the 120-day review period provided for in federal law would end on July 3, 2002. As indicated in Section II of this Report, CBG has notified both AT&T Broadband and Comcast Cable, on multiple occasions, that AT&T's and Comcast's Forms 394 are incomplete. Accordingly, the 120-day review period never started. Both AT&T Broadband and Comcast Cable have disputed this fact. What cannot be disputed is the fact that on or about May 6, 2002, CBG received information from a public source indicating that AT&T and Comcast had, among other things, significantly changed AT&T Comcast's corporate govemance structure. CBG immediately informed AT&T Broadband and Comcast Cable that, at a minimum, the reorganization of the Transaction required notification of the LFAs and extension of the federal review period. In the interest of time, both A&S and CBG began analyzing the new transaction once they were able to obtain AT&T Comcast's amended Form S-4, which was filed with the Securities and Exchange Commission at the end of April 2002. We should note, however, that it could be argued that the ongoing transfer review proceedings were terminated by the filing of the amended Form S-4 and that new Forms 394 must be filed with the LFAs (thus triggering a new 120-day review period). The LFAs could also argue that the 120-day deadline has not begun on the March 5 transfer applications, since AT&T and Comcast never completed those applications, in accordance with applicable laws, ordinances and agreements. Maintaining either position, though, would expose the LFAs to legal uncertainty and could prejudice their legal rights if a court were to rule that a new Form 394 was not required and/or that the AT&T Comcast Transfer Page 9 Application Report Creighton Bradley & Guzzetta, LLC May 30, 2002 applicable 120-day deadline expired on July 3, 2002, since absent final LFA action within the federal review period, the Transaction will be deemed approved by operation of federal law. CBG therefore believes it would be prudent for the LFAs to act prior to July 3, notwithstanding the fact that: (i) AT&T and Comcast have asked the LFAs to review a transaction that is entirely different than the one described in the FCC Forms 394 and related materials; and (ii) neither company has completed its transfer applications. IV. STANDARD OF REVIEW At the time of awarding the original Franchises and in subsequent transfers of the Franchises, the LFAs considered and approved the technical ability, financial capacity, legal qualifications and character of the original and subsequent owners of the cable systems, as well as other appropriate factors. The same considerations apply to the current review. The sources of information used in evaluating these factors included the FCC Form 394, its exhibits, the current Franchises, various FCC rules and regulations regarding cable communications systems, state and federal law, the Interact and various subsequent written and oral responses to requests for documents from AT&T Broadband and Comcast Cable. The LFAs' task in this process is to review the information provided regarding the Transaction and to approve or deny the Transaction. The LFAs have the express right to approve or disapprove this Transaction. The standard of review is that the LFAs' consent shall not be unreasonably withheld. For the purpose of determining whether they will consent to the Transaction, the LFAs must make inquiry into the legal, technical and financial qualifications and other appropriate factors regarding the party acquiring control of the Franchises, in this case AT&T Comcast. In analyzing the Transaction, the LFAs must consider whether AT&T Comcast meets all of the criteria originally considered in the granting of the Franchises. Note, however, that this analysis is not a comparison between AT&T or Comcast and the new AT&T Comcast. Rather, this analysis is an application of factors to determine whether AT&T Comcast satisfies the applicable standards to the reasonable satisfaction of the LFAs. The LFAs should focus on the following factors in determining whether to approve or deny the Transaction: 1. Legal and character qualifications of AT&T Comcast; 2. Technical ability of AT&T Comcast and its operational staff; Financial stability and qualifications of AT&T Comcast, and the impact of the Transaction on services and rates; AT&T Comcast Transfer Application Report Creighton Bradley & Guzzetta, LLC Page 10 May 30, 2002 4. Managerial qualifications of AT&T Comcast and its subsidiaries; 5. Impact on cable service competition; and 6. Other appropriate factors, including those required by local law. CBG has conducted an extensive review of all relevant materials on behalf of the LFAs. This Report is a "shorthand" synthesis of that review in an attempt to fully inform the LFAs without overwhelming the decision making body with detail and minutia. Obviously, this review extended far beyond the summary of this report, and CBG is available to further expand on this summary should the LFAs have any questions. V. DESCRIPTION OF TRANSACTION It is necessary to understand the corporate structuring of the Transaction to determine whether such a structure is lawful, but also to understand the financing (at what level is the money adequate to meet existing and anticipated franchise obligations), and to establish which entity's technical qualifications should be reviewed. AT&T Comcast Corporation ("AT&T Comcast"), Comcast Corporation ("Comcast") and AT&T Corp. ("AT&T") have entered into an Agreement and Plan of Merger, dated December 19, 2001, and amended April 29, 2002 (the "Agreement"),4 under which Comcast and AT&T have agreed to combine Comcast's and AT&T's broadband businesses. Under the Agreement, AT&T Broadband Corp., a holding company for AT&T's broadband division ("ATTB"), will be spun-off to AT&T's shareholders. Upon completion of the spin-off, both Comcast and ATTB will merge with temporary holding companies (AT&T Broadband Acquisition Company and Comcast Acquisition Company) and become separate, wholly-owned subsidiaries of AT&T Comcast. Upon completion of these mergers, Comcast shareholders will receive one share of the corresponding class of AT&T Comcast stock for each of their shares of Comcast stock, and AT&T shareholders will receive in the aggregate for their shares of ATTB common stock 1.235 billion shares of AT&T Comcast Class A stock, or approximately 0.34 shares of AT&T Comcast for each share of AT&T stock. The AT&T Comcast transaction will occur in several steps and will be subject to the receipt of the necessary governmental approvals and the satisfaction or (to the extent permissible) waiver of other conditions specified in the Agreement, such as required shareholder approvals. 4 Counsel for AT&T and Comcast has represented in writing that "in no respect has the structure of the transaction been altered nor have any parties to the transaction changed as a result of the changes" contained in the April 29, 2002, registration statement and the modifications made to the Agreement and Plan of Merger. CBG, however, believes the changes made by AT&T and Comcast alter the structure of the transaction, since, among other things, AT&T Comcast's corporate governance structure was modified. AT&T Comcast Transfer 11 Application Report Page Creighton Bradley & Guzzetta, LLC May 29, 2002 AT&T will (i) assign and transfer to ATTB all of the assets of AT&T's broadband cable and cable telephony business and (ii) cause ATTB to assume all of the liabilities of AT&T's broadband business (as reflected in the AT&T Broadband Group balance sheet dated as of December 31, 2000 or as otherwise specified in the Separation and Distribution Agreement between AT&T and ATTB) that are not at such time assets or liabilities of AT&T Broadband or an AT&T Broadband subsidiary. AT&T will then spin-offATTB to the shareholders of AT&T. Immediately following this spin-off, Comcast and ATTB will each merge with different, wholly-owned subsidiaries of the newly-created AT&T Comcast Corporation. Specifically, Comcast will merge into Comcast Acquisition Corp., a newly formed, wholly-owned subsidiary of AT&T Comcast, with Comcast surviving. ATTB will merge into AT&T Broadband Acquisition Corp., also a newly-formed, wholly-owned subsidiary of AT&T Comcast, with ATTB. In addition, at the option of AT&T Comcast, AT&T Broadband Holdings, LLC, which will be a wholly-owned subsidiary of AT&T Comcast, will become an intermediate holding company between AT&T Comcast and ATTB. Appendix A contains two charts that depict the proposed ownership structure of AT&T Comcast. Following these steps, AT&T Comcast will be the new public company parent of ATTB and Comcast, both of which will be separate, wholly-owned subsidiaries of AT&T Comcast. As a result, AT&T Comcast will consist of both companies' cable systems, both companies' interests in programming services, as well as other assets owned by the two companies. The company holding the cable franchise with the LFAs will not change as a result of this Transaction. However, the ultimate controlling parent company of each franchise holder will become AT&T Comcast. Vl. LEGAL QUALIFICATIONS The legal qualifications standard relates primarily to the analysis of whether AT&T Comcast and its affiliates are duly organized and authorized to own the cable systems and the Franchises via the Transaction. As stated above, the ownership of the Franchises will indirectly rest in AT&T Comcast as the ultimate parent of the actual franchise holder in the LFA's respective franchise areas. We have reviewed this corporate structuring and the necessary transactions related thereto. All necessary corporate entities are or will be duly organized. In this regard, AT&T Comcast itself has already been established and duly incorporated in Pennsylvania. We have also concluded that all of the entities necessary to be qualified to transact business in Minnesota, Tennessee, and Wisconsin are or will be so qualified. As discussed above, those entities are not changing as a result of the Transaction. The legal analysis of the proposed merger also involves an analysis of whether the overall Transaction itself complies with federal, state and local law. We have reviewed the relevant AT&T Comcast Transfer Application Page 12 Report Creighton Bradley & Guzzetta, LLC May 29, 2002 agreements between AT&T Comcast, AT&T and Comcast, and comments that were filed with the FCC concerning the Transaction. Based upon our review, it is our opinion that the Transaction does not violate Federal, State or local law at this time, although issues concerning horizontal and vertical ownership restrictions may arise in the future. Therefore, the LFAs would not have a reasonable basis to withhold approval of the Transaction based on the above. VII. TECHNICAL ABILITY While the technical ability analysis of the Transaction should focus on the technical expertise and experience of AT&T Comcast, our review must focus on a best analysis of ATTB and Comcast (and their subsidiaries), in this case, as those preexisting companies will manifest themselves operationally in the merged entity, since they will remain after the Transaction is consummated and will likely be primarily responsible for day-to-day operations. Our focus on ATTB and Comcast (and their subsidiaries) is also necessitated by the fact that we have been able to obtain little information on AT&T Comcast's technical qualifications, since both AT&T Broadband and Comcast Cable have refused to answer virtually any question related to the eventual operation of AT&T Comcast (proffering the argument that they are prohibited by law from doing so). Further, since the answers of both AT&T Broadband and Comcast Cable concerning further inquiry into AT&T Comcast's qualifications seem to imply that, at least for the time being, the local or regional technical staffs with which the LFAs are familiar will stay relatively unchanged, conclusions regarding the technical performance of the systems affected by the Transaction can be drawn from experience with the current technical support systems. As opposed to the usual transfer of ownership in which a different corporate culture will emerge with one company selling its systems to a different company, this Transaction will retain significant elements of the previous owners, AT&T Broadband and Comcast. Some of the systems involved in this analysis were AT&T Broadband systems and some were Comcast systems. Although AT&T Comcast had reported in responses to inquiries that it plans to ultimately consolidate corporate functions, AT&T Comcast was vague (to say the least) as to what such a consolidation would entail, and what effect it would have on the LFAs. Therefore, it is impossible at this time to determine which parts of the original corporate cultures of ATTB and Comcast will prevail in the new merged company, although it is clear that Mr. Brian L. Roberts (from Comcast) and Mr. C. Michael Armstrong (from AT&T) will have powerful and prominent roles in the merged company. Both AT&T Broadband and Comcast were able to operate cable systems prior to the Transaction. Each of the LFAs served by both of the original companies has had issues with the performances of both ATTB and Comcast at the local level. Such things as telephone answering response times and commitments for institutional networks are of concern. Additionally, significant concerns relative to the ongoing maintenance and technological development of the local networks remain, especially in light of A&S's financial analysis, which follows in this Report. AT&T Comcast Transfer Page 13 Application Report Creighton Bradley & Guzzetta, LLC May 29, 2002 Although grave concerns exist as to AT&T Comcast's ability to financially support adequate technical performance in the local Franchise territories should the Transaction take place, for the purpose solely of the technical analytical piece of this Report, and assuming adequate resources were available to AT&T Comcast and the local systems (which we do not), the overall technical ability of the predecessor companies (which were already approved in the context of prior transfers of ownership and control), and the presumed technical ability of the successor merged entity (assuming keeping most of the existing technical support in place) requires an analytical conclusion that there would be no reasonable basis for the LFAs to withhold approval of the merger based solely on the technical qualifications of AT&T Comcast, as speculative as that basis must be. VIII. FINANCIAL STABILITY AND OTHER FINANCIAL ISSUES A. Backl~round~ Issues~ and Problem~, The financial stability factor in this case relates to whether AT&T Comcast has the financial resources available or committed, now and in the future, to enable ATTB and Comcast to operate their systems in accordance with applicable laws, standards, franchise ordinances and agreements. Financial stability also pertains to whether the Transaction, as presented, is reasonable and economically viable. Other financial issues to be considered are the Transaction's impact on rates and services, including (but not limited to) the availability of programming services, the quality of customer service and maintenance and repair practices. In addition, the LFAs should consider whether AT&T Broadband and Comcast will have sufficient cash flow after the Transaction to meet Franchise obligations, including, by way of example and not limitation, franchise fee payments and PEG support payments. A&S has reviewed the financial data AT&T and Comcast submitted in their transfer applications and in response to written and oral data requests. In addition, A&S has analyzed publicly filed documents concerning the Transaction that were available from the websites of the Securities and Exchange Commission, the Federal Communications Commission, Comcast Corporation and AT&T Corporation as of May 13, 2002. A&S's findings concerning AT&T Comcast's financial fitness, and the problems and risks posed by the Transaction are contained in a report dated May 24, 2002 (the "A&S Report"). For your convenience, we have attached the A&S Report as Appendix B to this Report and incorporated it herein. According to A&S, AT&T Comcast will inherit approximately $32.7 billion of debt once the Transaction is consummated -- $12.2 billion of Comcast debt, $19.3 billion of AT&T Broadband debt, plus additional debt associated with the merger.5 Over $16 billion of the foregoing debt will mature by the year 2006, which means that it must be repaid or refinanced over the next few years. At the same time, A&S believes that AT&T Comcast will continue to make capital expenditures in 5 See A&S Report at I. AT&T Comcast Transfer Page 14 Application Report Creighton Bradley & Guzzetta, LLC May 29, 2002 excess of $4.0 billion per year, while suffering a cash flow deficit of over $3.5 billion a year through 2006. The need to fund maturing debt and capital expenditures, as well as cash flow for day-to-day operations, will increase AT&T Comcast's debt by at least $3.0 billion annually for three to five years following the Transaction. ^&S believes this could result in a debt load of $40.0 billion. As a result, revenue deficits could continue into the future for an indeterminate period of time. The exact amount and duration of the revenue deficits that will occur are unknown, since AT&T Comcast has not performed any future operating projections (i.e., cash flows, revenues and expenses). This is significant because it shows that AT&T Comcast, Comcast and AT&T do not truly know or understand all the ramifications of the Transaction. In this regard, AT&T Comcast cannot prove that: (i) the short-term cash flow deficits discussed above are insignificant in light of anticipated cash flows and debt loads; (ii) long-term cash flow makes the Transaction economically viable; or (iii) the "synergies" and "efficiencies" cited in various documents are realistic.6 Given the level of debt and revenue shortfalls predicted by A&S, it is likely that AT&T Comcast will need to increase revenues (through rate increases), decrease expenses (e.g., by terminating customer service representatives and repair/maintenance technicians, eliminating programming services, further consolidating customer service or implementing other cost-cutting measures) and/or reduce capital expenditures for facilities and equipment. Indeed, according to the A&S Report, AT&T Comcast's Amended Form S-4 suggests that AT&T Broadband, Comcast and/or AT&T Comcast may make take such steps to address cash flow concerns.? A&S is also concerned that AT&T Broadband is guaranteeing the debt of its subsidiaries and unconsolidated joint ventures.8 As of December 31, 2001, the amount of this debt is $1.463 billion. The risks associated with guaranteeing the debt of joint ventures and subsidiaries are highlighted by Adelphia's financial problems, which are attributable to loan guarantees made to Rigas family partnerships.9 An additional problem noted in the A&S Report is that certain agreements between AT&T Broadband and AT&T will survive the Transaction. A&S believes two of those agreements - the Master Facilities Agreement and the First Amended and Restated Local Network Connectivity Services Agreement - may inhibit AT&T Comcast's ability to generate additional cash flow by hindering the company's ability to effectively compete against AT&T in various telecommunications service markets. This is because, under the foregoing contracts, AT&T Comcast, through its AT&T Broadband subsidiary, will have to: (i) lease certain network elements and management and operational services from AT&T for a specified period of time; (ii) allow AT&T to use its existing fiber facilities; and (iii) construct and lease to AT&T new fiber facilities in the areas served by 6 See A&S Report at 2-3. 7 ld. at 2. 8 /d. at 6. 9 See, e.g., Ventura County Star (May 22, 2002) (http://www.insidevc.com/vcs/business/article/0,1375,VCS_128_1169695,00.html). AT&T Comcast Transfer Application Report Creighton Bradley & Guzzetta, LLC Page 15 May 29, 2002 AT&T Broadband's cable systems. As a result, AT&T may be able to offer certain telecommunications services for less than AT&T Comcast, which means AT&T Comcast may lose existing customers (and revenues), and future revenue opportunities.~° Finally, the A&S Report concludes that the six synergies and efficiencies relied upon by AT&T Comcast to support the Transaction are not reasonable. The bases for A&S conclusion are: (i) there are no supporting analyses or documentation for the claimed synergies and efficiencies; (ii) the disclaimers made by AT&T Comcast's expert mean the synergies and efficiencies quantified are suspect; and (iii) the synergies and efficiencies identified are based on experiences from prior acquisitions, and not on the facts surrounding the Transaction. ~ Thus, the fundamental rationales for the Transaction are in doubt. In light of the problems and concerns identified above, the A&S Report opines that: "[t]he franchises served by Comcast will go from a company currently touted as being the strongest financial position of any of the cable multiple system operators.., to a company, AT&T Comcast, with a large amount of debt and significant shortages in cash flow. Franchises currently served by AT&T Broadband will go fi'om a company with significant debt and shortages in cash flow to a company with even more debt and greater shortages of cash flow.''~2 Consequently, A&S does not believe that the Transaction will be beneficial to any of the LFAs, at least through 2006, and possibly beyond. 13 B. Non-Beneficial vs. Detrimental Imp,acts of the Transaction. It is the opinion of CBG that the LFAs have a reasonable basis to withhold approval of the Transaction based on the conclusion of A&S that the Transaction would not be beneficial to any of the LFAs, at least through 2006, and possibly beyond. However, after reviewing the A&S Report, CBG was concerned that its substance pointed to even more serious ramifications of the Transaction. In particular, the A&S Report implies that not only is the Transaction not beneficial to the LFAs and by extension to subscribers, but the Transaction may even cause harm or detriment to the LFAs and subscribers. So as not to read into the A&S Report a conclusion that was not there, and to allow A&S an oppommity to clearly and succinctly respond to specific areas of concern of CBG, we requested a further response fi'om A&S as to whether the Transaction may also be detrimental to subscribers and the LFAs that represent them. 10 See the A&S Report at 6-7. 11 Id. at 7-8. 12 Id. at 3-4. 13 Id. at 12. AT&T Comcast Transfer Application Report Creighton Bradley & Guzzetta, LLC Page 16 May 29, 2002 Is this just saying the same thing a different way? No. Simply stated, it is possible for something to be "not beneficial" to an entity, but still not be "detrimental." In other words, if the Transaction would simply not do the subscribers any good, but would not harm them either, a somewhat lower public policy threshold of concern is presented to the policy makers of the LFAs. Therefore, CBG presented A&S with a list of specific concerns often expressed by our clients, the LFAs. CBG limited its specific concerns to important components of the delivery of cable services to constituents within the LFAs by the incumbent cable operator. These concerns are all valid LFA considerations in the analysis of any proposed Transaction, such as in this case. CBG posed specific questions to A&S regarding the Transaction's financial impact on such things as subscriber system maintenance, institutional network system maintenance, customer service, PEG support, franchise compliance, proposed or future system upgrades, and future technological improvement. In each case, CBG asked A&S to respond using one of five (5) succinct levels of response as to whether the Transaction would have a detrimental impact on a specific area of concern. Immediately following is the exact text of the inquiry to A&S with the A&S response in bold type: We have received your report in the merger of AT&T and Comcast. I have reviewed the report and sincerely appreciate the quality of your work and the depth of your analysis. While we will include your entire report as a part of our analysis, I would appreciate your focusing your expertise and knowledge as a result of your analysis to advise my clients in response to specific questions which I know are of concern to them. Since the policy makers are not for the most part trained in the sophisticated financial analysis that you offer, if is helpful in their consideration to focus on specific questions answered by you based on your review, analysis and expertise. Please respond as specifically as possible ("Yes" or "No" are certainly acceptable responses-- we can use your full report to further understand your short responses to this inquiry). As a start, I would appreciate an attempt at limiting your responses to the following: Yes, and probably significantly Yes, and possibly significantly Yes, but just moderately Yes, but only slightly No Please feel free to include, however, any explanatory information you believe is necessary for you to explain any answers you believe need explanation beyond your report we already have. However, at this point in the review, brevity is a virtue. Please feel free to respond AT&T Comcast Transfer Page 17 Application Report Creighton Bradley & Guzzetta, LLC May 29, 2002 within the text of this email, or simply list the number of the question and your response, and we can put it together upon receiving your response. I would appreciate your response as soon as possible so that we can meet the deadlines for our clients. Questions: Will the merger of AT&T Broadband Corp. and Comcast Corporation have a detrimental impact on: o the availability of funds (capital and operating) for ongoing maintenance of the local subscriber networks; Response: Yes, and possibly significantly the availability of funds (capital and operating) for ongoing maintenance of the local institutional networks; Response: Yes, and possibly significantly the availability of funds (capital and operating) for upgrades and future technical improvements of the local subscriber networks; Response: Yes, and possibly significantly the availability of capital funds for initial construction, upgrade, and future technical improvement of the local institutional networks; Response: Yes, and possibly significantly the availability of funds for capital support of public, educational and government access as required by the local franchise agreements; Response: Yes, and possibly significantly the availability of funds for the hiring and training of customer service staff; Response: Yes, and possibly significantly the availability of funds for the upgrade and improvement of call centers and company telephone response systems; AT&T Comcast Transfer Application Page 18 Report Creighton Bradley & Guzzetta, LLC May 29, 2002 Response: Yes, and possibly significantly the availability of funds for implementation, maintenance and future technical improvement of Emergency Alert Systems; Response: Yes, and possibly significantly- to the extent supported by the cable operator the availability of operating funds to support and provide adequate personnel to test the subscriber network and institutional networks for technical problems and compliance with applicable technical and performance standards; and Response: Yes, and possibly significantly 10. 11. 12. the availability for funds to support increased and improved service offerings on the local cable systems. Response: Yes, and possibly significantly Would the proposed merger likely result in the further consolidation of customer service functions? Response: Yes, and probably significantly. In order to achieve the synergies claimed by Comcast as associated with this transaction, these types of consolidations would need to occur. Would the proposed transaction cause an upward pressure on rates? Response: Yes, but just moderately. AT&T Comcast will be limited in the amount rates can increase due to competitive pressures and the subscriber's ability to pay. As discussed in the report, rates may be increased by revenue may not increase. The Franchise of the Metropolitan Government of Nashville and Davidson County, Tennessee includes a requirement that a determination be made as to: 13. Whether operation by the transferee or approval of the transfer would adversely affect subscribers, metropolitan Nashville's interest under this AT&T Comcast Transfer Application Report Creighton Bradley & Guzzetta, LLC Page 19 May 29, 2002 chapter [6.08], the franchise agreement, other applicable law, or the public interest, or make it less likely that the future cable-related needs and interests of the community would be satisfied at a reasonable cost. Response: As discussed in the report, Comcast will be in a less favorable financial position from the merger. So the response to #13 would be Yes. Thank you again for your consideration of our concems and questions. Tom Creighton C. Conclusion as to Financial Considerations. Never in the over 35 years of combined experience of representing municipalities in cable communications issues have the principals of CBG been presented with such a negative financial report related to a proposed transfer of ownership or control. At virtually every turn, the LFAs are confronted with legitimate, significant concerns regarding the financial viability or reasonableness of the Transaction as it relates to local cable systems. It is the conclusion of CBG, based upon the financial analysis of A&S, that the Transaction is neither viable nor reasonable. In addition, as indicated above, AT&T Comcast is not financially qualified to own or operate the cable systems in the LFAs' communities, or to control ATTB and Comcast (and their subsidiaries) and the Franchises. It is also evident that the Transaction will detrimentally affect services, system maintenance and repair, customer service, the integration of technical improvements, and the ability of Comcast Cable and AT&T Broadband to meet Franchise commitments. Moreover, the Transaction would likely cause a moderate increase in rates. CBG is under no delusions regarding the significance of its findings. The Transaction, as described in the Forms 394 and other documents, would encompass over forty percent (40%) of the cable subscribers in the country. The sheer magnitude of the numbers involved in the Transaction could lead a lay person to the conclusion that there must surely be adequate resources available to meet any particular obligation. However, the financial analysis conducted by A&S illustrates that as to virtually every issue that is a legitimate concern of the LFAs, the results of the Transaction would not only be detrimental to the LFAs and subscribers, but "possibly significantly" detrimental. It is therefore CBG's conclusion that individual LFAs have numerous and significant bases on which to withhold approval of this Transaction. Accordingly, CBG recommends that the LFAs adopt a resolution or ordinance, as appropriate, withholding their consent to the Transaction AT&T Comcast Transfer Application Report Page 20 Creighton Bradley & Guzzetta, LLC May 29, 2002 IX. IMPACT OF THE PROPOSED TRANSACTION ON COMPETITION As indicated in Section III of this Report, Section 613(d) of the Federal Cable Act, 47 U.S.C. § 533(d), permits the LFAs to consider whether the Transaction "may eliminate or reduce competition in the delivery of cable service" in their respective franchise area(s). If a local franchising authority determines that the Transaction will, in fact, eliminate or reduce competition, it may withhold approval of AT&T's and Comcast's transfer applications. CBG reviewed AT&T's and Comcast's FCC Forms 394 (including the exhibits thereto), AT&T Comcast's Forms S-4, AT&T's and Comcast's Applications and Public Interest Statement, and certain materials provided in response to our data requests, as well as publicly available information, to determine whether the Transaction would have a negative impact on cable service competition in any of the LFAs' franchise areas. In the course of our review, we found that: With minor exceptions, unrelated to our analysis, Comcast Cable and AT&T Broadband do not presently own cable systems or otherwise provide cable service in the same franchise areas? Stated differently, AT&T Broadband and Comcast Cable are not currently competing head-to-head to provide cable service in the LFAs' franchise areas; AT&T Broadband and Comcast Cable did not have any pre-merger plans to provide cable service in the same market? and there are no non-compete or other agreements between Comcast Cable and AT&T Broadband "that will adversely affect subscribers or services in the LFAs' communities.''~6 We interpret this to mean that AT&T Broadband and Comcast Cable have not entered into any agreement that expressly prohibits them from directly competing against each other in the same market. 27 Based on the foregoing, CBG does not believe that the Transaction, as described in AT&T's and Comcast's FCC Forms 394, will immediately reduce or eliminate competition in the delivery of cable service in the LFAs' franchise areas. In addition, we have not uncovered any credible, concrete or compelling evidence that suggests the Transaction (in and of itself) would have the effect of reducing or eliminating cable service competition in the future. Cable operators have historically not 14 See Applications and Public Interest Statement, Description of Transactions, Public Interest Showing and Related Demonstrations, at pp. 5 (February 28, 2002). 15 See Applications and Public Interest Statement, Description of Transactions, Public Interest Showing and Related Demonstrations, at pp. 66 (February 28, 2002). 16 See AT&T Broadband's April 12, 2002, Response to Question #7 in CBG's April 2, 2002, Request for Information, and Comcast's April 12, 2002, Response to Question #5 in CBG's April 2, 2002 Request for Information. 17 Under the terms of the proposed merger, AT&T Broadband and Comcast will remain separate entities. Thus, they could, in theory, each decide to provide cable service in the same franchise area. Such a scenario, however, is extremely unlikely. AT&T Comcast Transfer Application Report Page 21 Creighton Bradley & Guzzetta, LLC May 29, 2002 overbuilt each other's cable systems, and we have no reason to believe that this practice will ever change (regardless of whether the Transaction is approved or denied), since there is no major economic impetus to do so. In general, cable operators have been most interested in making investments that preserve and enhance the value of their existing systems (e.g., performing network upgrades), as opposed to incurring massive costs to compete against an entrenched cable service provider in a new market (where a solid return on investment is not guaranteed, and highly speculative). Competitive overbuilders, such as WideOpenWest, currently face a number of hurdles when entering a market already occupied by an incumbent cable operator. Many of those hurdles are financial in nature and are attributable to the fixed start-up costs associated with the construction of a state-of- the-art cable system.~8 Other hurdles include obtaining access to desirable programming (which is often owned by the competitor or its subsidiaries or affiliates), the ability to sell advertising on incomplete systems that may cover only a small geographic area and reach very few subscribers, and successfully convincing a competitor's subscribers to change service providers. While it is tree that the aforementioned barriers to market entry would not be reduced or eliminated by the Transaction, we have not discovered, in the time available for this review, any unbiased data which definitively shows that the ATTB/Comcast merger would, in and of itself, significantly or materially worsen the present competitive environment. In this regard, the Transaction will not directly affect the large capital expenditures required to build a cable system from scratch or the need for competitors to effectively market and price their services. Further, AT&T Comcast would only have an attributable interest in twenty-four national and regional video programming networks, out of 374 programming services currently offered by a variety of sources.19 This means the Transaction should not appreciably contribute to content discrimination against competitive overbuilders and other cable service providers. Moreover, A&S has concluded that the Transaction would not increase the merged company's advertising leverage. As A&S points out in its report: we do not believe that AT&T Comcast would be able to command more revenue from advertisers simply because it has a higher number of subscribers. The rates for advertising are driven by the number of viewers of a particular program. The combined company's total number of viewers will not change because of the merger. It is conceivable that AT&T Comcast may be achieve some operating efficiencies in 18 See, e.g., Duopolistic Competition in Cable Television, 7 Yale J. on Reg. at 68 ("[i]n almost all cases, cable operators are unanimous in their assessment that overbuilds do not work as a result of the large capital requirements needed up front and the necessity of cornering at least 40 percent of the market once the system is built in order to obtain a return on that invesunent.") 19 See Applications and Public Interest Statement, Description of Transactions, Public Interest Showing and Related Demonstrations, at pp. 70 (February 28, 2002). II ~lJ AT&T Comcast Transfer Application Report Page 22 / Creighton Bradley & Guzzetta, LLC May 29, 2002 managing this side of its business, but it is not appropriate to attribute additional revenue to this specifically from the merger. A&S Report at 11-12. As importantly, the Transaction would not alter the fact that selling advertising on new or incomplete systems with few subscribers will always be more difficult than selling advertising on a mature cable system with a large embedded customer base. Likewise, the Transaction would not change the fact that AT&T Broadband and Comcast akeady participate in an advertising sales effort that is national in scope. More specifically, Comcast and AT&T Broadband are part of the consortium of cable operators that own National Cable Communications, Inc. ("NCC"), a company that sells national advertising on as many as 37 cable television networks.2° Both AT&T Broadband and Comcast have pre-existing exclusive agreements with NCC for all national advertising. Given this arrangement, it is evident that the companies established a coordinated, national advertising network long before the Transaction. It is also evident that the Transaction will not strengthen the existing network, since subscriber viewership, which drives advertising, will not change as a result of the proposed merger? Based on the foregoing, we do not believe that 47 U.S.C. § 533(d) provides a rational basis for withholding approval of the Transaction. X. AT&T COMCAST CORPORATION'S MANAGERIAL QUAIjlZICATIONS Pursuant to the terms of the Transaction, AT&T Comcast will have an atypical governance arrangement. According to an amended Form S-4 filed with the Securities and Exchange Commission on April 29, 2002: [t]he term of the AT&T Comcast Board upon completion of the AT&T Comcast transaction will not expire until the 2004 annual meeting of AT&T Comcast shareholders. Since AT&T Comcast shareholders will not have the fight to call special meetings of shareholders or act by written consent and AT&T Comcast directors will be able to be removed only for cause, AT&T Comcast shareholders will not be able to replace the initial AT&T Comcast Board members prior to that meeting. At,er the 2004 annual meeting of AT&T Comcast shareholders, AT&T Comcast directors will be elected annually. Even then, however, it will be difficult for an AT&T Comcast shareholder, other than Sural LLC or a successor entity controlled by Brian L. Roberts, to elect a slate of directors of its own choosing to the AT&T Comcast Board. Brian L. Roberts, through his control of Sural LLC or a successor entity, will hold a 33 1/3% nondilutable voting interest in AT&T Comcast 20 See A&S Report at 11. 21 Id. AT&T Comcast Transfer Application Report Creighton Bradley & Guzzetta, LLC Page 23 May 29, 2002 stock. In addition, AT&T Comcast will adopt a shareholder fights plan upon completion of the AT&T Comcast transaction that will prevent any holder of AT&T Comcast stock, other than any holder of AT&T Comcast Class B common stock or any of such holder's affiliates, from acquiring AT&T Comcast stock representing more than 10% ofAT&T Comcast's voting power without the approval of the AT&T Comcast Board. In addition to the governance arrangements relating to the AT&T Comcast Board, Comcast and AT&T have agreed to a number of governance arrangements which will make it difficult to replace the senior management of AT&T Comcast. Upon completion of the AT&T Comcast transaction, C. Michael Armstrong, Chairman of the Board and CEO of AT&T, will be the Chairman of the Board of AT&T Comcast and Brian L. Roberts, President of Comcast, will be the CEO and President of AT&T Comcast. After the 2005 annual meeting of AT&T Comcast shareholders, Brian L. Roberts will also be the Chairman of the Board of AT&T Comcast. Prior to the sixth anniversary of the 2004 annual meeting of AT&T Comcast shareholders, unless Brian L. Roberts ceases to be Chairman of the Board or CEO of AT&T Comcast prior to such time, the Chairman of the Board and CEO of AT&T Comcast will be able to be removed only with the approval of at least 75% of the entire AT&T Comcast Board. This supermajority removal requirement will make it unlikely that C. Michael Armstrong or Brian L. Roberts will be removed fi'om their management positions. Amendment No. 2 to Form S-4, Chapt. I at pp. 31-32. After the Transaction is consummated, AT&T Comcast will have an Office of the Chairman comprised of the Chairman of the Board (C. Michael Armstrong) and the CEO (Brian L. Roberts) from the completion of the merger until the earlier to occur of(i) the 2005 annual meeting of AT&T Comcast shareholders (at which Mr. Armstrong will step down) and (ii) the date on which C. Michael Armstrong ceases to be the Chairman of the Board. The Office of the Chairman will be AT&T Comcast's principal executive deliberative body with responsibility for corporate strategy, policy and direction, governmental affairs and other significant matters? Under AT&T Comcast's initial management structure, as described above, the Board of Directors, Chairman of the Board and Chief Executive Officer will have little or no accountability for the decisions they make. This is significant because, as ihdicated above, the Board and the Office of the Chairman would be making important decisions concerning local cable systems. In light of the economics of the Transaction, which are discussed in the A&S Report, and given the fact that the Board and Office of the Chairman may act with impunity, it is likely that those decisions may include reductions in capital expenditures, decreases in expenses and/or revenue increasing measures? Such reductions, decreases and revenue increasing measures may, among other things, 22 See Amendment No. 2 to Form S-4 at Ch. VIII, pp. 1-2 (April 29, 2002). 23 See A&S Report at 2. AT&T Comcast Transfer Application Report Page 24 Creighton Bradley & Guzzetta, LLC May 29, 2002 result in higher service rates and detrimentally impact service quality, customer service and AT&T Broadband's and Comcast Cable's ability to ensure that local franchise commitments are satisfied. At this point, however, it is not possible to ascertain with certainty what types of decisions will be made at the ultimate parent company, since AT&T Broadband and Comcast have refused to provide such information? In addition, many AT&T Comcast Board members and officers have not yet been selected, so it is not possible to research their record, and to determine whether it is likely that they will take actions which are inconsistent with franchise obligations, subscriber interests and/or the public interest. AT&T Broadband and Comcast Cable have indicated that the Transaction will not immediately result in any operational or managerial changes at the local franchise level. At the same time, however, AT&T Broadband and Comcast Cable have admitted that they do not know if there will be any changes to existing management structures as a result of the Transaction. Assuming changes in management are made, the impact of such changes is unknown at this time, since the companies have not stated what types of decisions, if any, would be made at the local level alter the Transaction is completed. We should also note that AT&T Broadband and Comcast Cable never furnished any information describing what decisions will be made at the regional or direct parent level (e.g., ATTB and Comcast, as opposed to ^T&T Comcast), even though such information was requested by CBG. Thus, it is unclear how AT&T Comcast will function, from a decision-making standpoint, alter the Transaction, except for the fact that the Office of the Chairman will be primarily responsible for corporate strategy, policy and direction, govemmental affairs and other significant matters. Within the Office of the Chairman, Brian Roberts will have day-to-day authority over the operations of AT&T Comcast? Given the uncertainties surrounding who will be making decisions about the LFAs' systems, and precisely what decisions will be made at local, regional, direct parent and indirect parent levels alter the Transaction is completed, it would be appropriate to require AT&T Comcast and Comcast or AT&T Comcast and ATTB to affirmatively guarantee that they: (i) will not interfere, directly or indirectly, with a franchise holder's ability to comply with its franchise obligations, and applicable laws and regulations; or (ii) will cause the franchise holder to comply with its franchise commitments and applicable laws and regulations at all times. It would also be advisable to have the local franchise holder re-affirm its understanding of and obligation to comply with franchise requirements. If such a guarantee and reaffirmation are obtained, we do not believe AT&T 24 According to A&S, budgets and major expenditures will be controlled by upper management, and revenues "collected locally [will be]... 'swept' into a central banking facility and managed for the whole company..." See A&S Report at 1. We are not certain, however, what specific decisions will be made by upper management at AT&T Comcast, as opposed to upper management at ATTB and Comcast. It is also possible that certain decisions could be made at a regional level, since "the resources or working capital for day-to-day expenses and payroll" are maintained at that level. See A&S Report at 1. 25 See AT&T Broadband's April 12, 2002, Response to Question #35 in CBG's April 2, 2002, Request for Information, and Comcast's April 12, 2002, Response to Question #27 in CBG's April 2, 2002 Request for Information. AT&T Comcast Transfer Application Report Page 25 Creighton Bradley & Guzzetta, LLC May 29, 2002 Comcast's management and governance scheme provides a reasonable basis for withholding approval of the Transaction. XI. AT&T COMCAST CORPORATION'S CHARACTER QUALIFICATIONS As part of our review, we evaluated whether AT&T Comcast, and its management, have the requisite character to control the cable systems in the LFAs' franchise areas. The primary purposes of evaluating a transfer applicant's character are to ascertain whether it is likely that the applicant, through its officers and directors, will defraud a local franchising authority or subscribers, or renege on its franchise obligations. To the best of our knowledge, neither AT&T Comcast nor its officers or directors have engaged in any activities that would call their character into question. This conclusion is based on the fact that: AT&T Comcast is a new entity, without any operational record; For the last ten years, none of the directors of AT&T or Comcast who may become directors or officers of AT&T Comcast have been convicted in a criminal proceeding of fraud, embezzlement, tax evasion, bribery, extortion, obstruction of justice, false/misleading advertising, perjury, antitrust violations, violations of FCC regulations or the Communications Act of 1934, or conspiracy to commit any of the foregoing offenses; and No current AT&T Comcast officer or director has ever been fined or otherwise sanctioned by a local franchising authority, the FCC or a state agency or commission for failure to comply with the requirements of a cable television franchise.26 Based on our findings and the representations contained in AT&T's and Comcast's application materials, CBG does not believe there are any character issues that provide a reasonable basis for withholding consent to the Transaction. XII. OTHER RELEVANT FACTORS Other relevant factors which have been reviewed and considered for the purpose of determining whether to approve or deny the proposed merger are: The Transaction would not cause any changes to the Franchises or any memoranda of understanding between specific LFAs and the local franchise holder; Local franchise holders would continue to be bound by the Franchises and any applicable memoranda of understanding after the Transaction is consummated; The Transaction would not affect any licenses or authorizations necessary for local franchise holders to operate and maintain the cable systems in the LFAs' franchise areas; 26 See AT&T Broadband's April 12, 2002, Response to Question #11 and #12 in CBG's April 2, 2002, Request for Information, and Comcast's April 12, 2002, Response to Question #9 and #10 in CBG's April 2, 2002 Request for Information. AT&T Comcast Transfer Application Report Page 26 Creighton Bradley & Guzzetta, LLC May 29, 2002 The Transaction would not violate any restrictions on cable system ownership; After the Transaction, individual franchise holders would remain obligated to comply with all federal, state and local laws pertaining to discrimination, equal opportunity employment and affirmative action; and All use of the public fights-of-way in the LFAs' communities will continue to be subject to all lawful and applicable licensing and franchising requirements that may apply.27 It is CBG's opinion that none of the foregoing factors provide a reasonable basis for withholding consent to the Transaction. XIII. CONCLUSION As a result of the above analysis, we have concluded that the LFAs should not approve the Transaction, even as modified in April 2002. AT&T Comcast is not financially qualified to control the Franchises or ATTB and Comcast (and their subsidiaries). In addition, it is clear that the Transaction, if approved, would detrimentally impact (and possibly significantly) network repair and maintenance, future technical improvements, customer service, the availability of funds to support increased and improved service offerings, and the ability of Comcast Cable and AT&T Broadband to meet their franchise obligations. At the same time, the Transaction would likely cause AT&T Broadband and Comcast Cable to raise rates. Accordingly, the Transaction would adversely affect subscribers, and the LFAs' interests under their Franchises. 27 See generally AT&T Broadband's April 12, 2002, Response to CBG's April 2, 2002, Request for Information, and Comcast's April 12, 2002, Response to CBG's April 2, 2002 Request for Information. AT&T Comcast Transfer Application Report Page 27 Creighton Bradley & Guzzetta, LLC May 29, 2002 APPENDIX A A T&T Comcast Corporation: Ultimate Corporate Structure With the completion of the merger transaction, A T& T Comcast Corpo/ation will be the new public company parent of both Co~ncast Corporation and A T& T Broadband, which will be wholly owned "brother/sister" subsidiaries ora T& T Comcast Corporation. Final Structure Comcast } AT&T Comcast Corp Sural LLC AT&T Broadband Holdinl/s, LLC AT&T Broadband Corp. Comcast Corp FINAL STRUCTURE Public Shareholders AT&T Broadband Holdings, L.L.C. AT&T Broadband Corp. AT&T Comcast Corporation AT&T Broadband LLC Media One Group, Inc. AT&T Broadband of Southern Cai, Inc. AT&T CSC, Inc. District Cablevision, Inc. Novato Cable Company South Chicago Cable, Inc. Existing Cable Franchise Holders (direct and indirect) Existing Cable Franchise Holders (direct and indirect) Existing Cable Franchise Holders (direct and indirect) APPENDIX B REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Prepared by Ashpaugh & Seuleo, CPAs, PLC 1133 Louisiana Avenue, Suite 106 Winter Park, FL 32789 (407) 645-2020 ascpas~ascpas.com May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FO~,M AT&T COMCAST CORPORATION Ashpaugh & Sculco, CPAs, PLC ("A&S") were engaged to perform a fmancial review of the proposed merger of Comcast Corporation ("Comcast") and AT&T Broadband ("ATT-B"), a wholly owned subsidiary of AT&T Corporation, to form AT&T Comcast. For this project, A&S has reviewed the publicly filed documents associated with this transaction available fi.om the websites of the Securities and Exchange Commission's ("SEC"), the Federal Communications Commission ("FCC"), Comcast Corporation and AT&T Corporation as of May 13, 2002. In addition, we have reviewed responses to information requests submitted to Comcast and ATT-B. The requests for information submitted to Comcast and ATT-B for each of the local fi:anchise authorities ("LFAs") requested information concerning the local impacts of the proposed merger. After discussion with representatives of Comcast, the focus of the review was changed to the effects of the transaction on the parent companies, and Comcast provided responses to the requests on that basis. The LFA's agreed to this approach because the companies explained that the financial management of Comcast, ATT-B and AT&T Comcast occurs or will occur at the upper levels of the companies. Cash collected locally is "swept" into a central banking facility and managed for the whole company, budgets and major expenditures are controlled by upper management. The local franchises have no financial resources to draw upon. For example, the resources or working capital for day-to-day expenses and payroll is maintained at the regional level. Similarly, there is no debt at the local or regional level, because all debt and financing is done at the parent level. The financial decisions and resources of the companies are concentrated at upper management and, as such, the analysis of the financial aspects of the proposed merger should be at the parent level. This makes the financial position of and decisions made by the parent key to the financial ability of the local system to operate. While our analysis has thus been conducted at the parent level, the focus of the LFA's review continues to be on the financial implications of the proposed merger on the local systems, including capital expenditures, franchise commitments and moneys due the LFAs. As will be explained below, the anticipated shortages of cash and working capital may increase certain risks for LFA's. For example, these shortages could impact the local franchisee's ability to implement or complete construction and to initiate and offer new and additional services in some or all LFAs. SUMMARY The merged company will start operation with approximately $32.7 billion of debt: $12.2 billion of Comcast and $19.3 billion of ATT-B, plus additional debt associated with the transaction.~ In excess of $16 billion of this debt will mature by 2006.2,3 For 2001, ATT-B and Comcast had a combined cash flow deficit of over $4.0 billion. The capital expenditures of ATT-B and Comcast are budgeted in total to be $5.6 billion for 2002.4 Based on our review of Amended S4, p. Iii4, filed April 29, 2002 with the Securities and Exchange Commission. An~nded S4, p. XII-101 for AT&T Broadband. SEC Form 10-K of Comcast Cable Communications, Inc. for the fiscal year ended December 31,2001, p.40. Amended S4, p. 1-37. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED 1ViERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 2 of 12 historical information publicly available and on statements of Comcast and ATT-B regarding future operations, we believe that capital expenditures of AT&T Comcast will continue to exceed $4.0 billion per year.5 We also believe the merged entity will have a cash flow deficit in excess of $3.5 billion annually for at least the first few years. The combination of the need to fund maturing debt, fund capital expenditures and fund cash flow will require the level of debt of AT&T Comcast to increase in excess of $3.0 billion annually for the first 3 to 5 years. This could result in a significant debt load in excess of $40.0 billion. These deficits may well continue into the future. We do not know, and Comcast and ATT-B have repeatedly told us in this process that they have not done projections of future operations (cash flows, revenues and expenses). Assuming an annual interest rate of 6.0%, an additional $3.0 billion in debt would increase interest expense $180 million per year and decrease cash flow and net income in the same manner. Since Comcast and ATT-B claim that they' are unable to provide projections, they are also unable to show that (a) the short-term deficits are insignificant in light of reasonably expected cash flows; (b) that the long term cash flows are likely to justify this transaction, or (c)that, as will be addressed below, the "synergies" and "efficiencies" associated with this transaction are reasonable. Operationally, AT&T Comcast may need to make decisions to reduce these impacts, such as to increase revenues, decrease expenses, or to reduce capital expenditures, or some combination. This creates a risk that the parent would be forced to reduce capital support to the local franchisee resulting in a reduction in the quality of existing services and customer service, and slowing or reducing the roll-out of new services. There are statements in the Amended S-4 that it may make such reductions in order to address its cash flow concerns and lack of funding for capital expenditures, and the company has not provided me with any data that contradicts these disclosures. Each of these cost-cutting decisions has other impacts. Competitively, AT&T Comcast may not be able to raise the price of its products and services without eroding revenues further, i.e., the revenues gained by an increase in price may be more than offset by the loss in sales and subscribers. Decreasing expenses may also impact the new company's operations, resulting in loss of revenues and subscribers, and reductions in certain expenses may be prevented by contract or may themselves create additional expenses. One example of this would be the payment of termination costs arising from reductions in workforce. Reducing capital expenditures may impact future growth in revenue by preventing the offering of new services, such as digital and video-on-demand, or may impact future expenses by not allowing reductions achieved through increased efficiencies. Reducing capital expenditures would likely lengthen the amount of time needed to complete the rebuild of the ATT-B systems and limit the build-out of existing cable systems, thus impacting AT&T Comcast's ability to mm this around within 5 years or longer. Technologically, AT&T Comcast will continue to need available funds to be able to add and upgrade equipment to provide new and enhanced services and to continue to expand its other lines of business, such as programming content. As stated in the We have requested projected information for the first 5 years of operation of the merged entity, but neither ATT-B nor Comcast would provide any such information. The declaration of Robert S. Pick, Senior Vice President, Corporate Development, Comcast Corporation, fried with the Federal Commtmications Commission and dated February 27, 2002 estimates savings of 5% to 7% on capital expenditures quantified as $200 to $300 million annually, which calculates to $4.0 billion of anticipated capital expenditures before the projected savings. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 3 of 12 following excerpt from pages 25 and 26 of Comcast Corporation's 10-K filed March 29, 2002 for the period ended December 31, 2001, only $225 million of the budgeted $1.5 billion of capital expenditures for 2002 relate to upgrading and rebuilding systems. Comcast has need for continuing capital expenditures within its current operations even after its own upgrade and rebuild is complete. Cable We expect our 2002 cable capital expenditures will include approximately $225 · million for the upgrading and rebuilding of certain of our cable communications systems, approximately $625 million for the deployment of cable modems, digital converters and new service offerings, and approximately $450 million for recurring, capital projects. The amount of our capital expenditures for years subsequent to 2002 will depend on numerous factors, some of which are beyond our control including: competition, cable system capacity of newly acquired systems, and o the timing and rate of deployment of new services. Commerce During 2002, we expect to incur approximately $175 million of capital expenditures for QVC, primarily for the upgrading of QVC's warehousing facilities, distribution facilities and information systems. Capital expenditures in QVC's international operations represent nearly 50% of QVC's total capital expenditures. Affiliation Agreements Certain of our content subsidiaries and QVC enter into multi-year affiliation agreements with various cable and satellite system operators for carriage of their respective programming. In connection with these affiliation agreements, we generally pay a fee to the cable or satellite operator based upon the number of subscribers. During 2002, we expect to incur $200 million to $300 million related to these affiliation agreements. Based on the limited information available, it is not possible to state that this merger will be beneficial to any of the existing franchises. For the period through 2006, AT&T Comcast will continue to have a shortage of cash and be annually increasing its level of debt. This will leave the merged company with a significant debt load that will impact its financial decisions for the following years. Since we have not been provided any projected data, the length of impact of this debt is unknown. Our firm also had the oppommity to review certain information pursuant to confidentiality agreements that prevent us from revealing the data. We can say, however, that the data was relevant to our analysis, and is consistent with our conclusion as to the financial problems presented by this transaction. The franchises currently served by Comcast will go from a company currently touted as being in the strongest financial position of any of the cable multiple system operators ("MSOs") to a company, AT&T Comcast, with a large ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 4 of 12 amount of debt and significant shortages in cash flow. Franchises currently served by AT&T Broadband will go from a company with significant debt and shortages in cash flow to a company with even more debt and greater shortages in cash flow. DISCUSSION We have relied on information provided by AT&T Broadband and Comcast. Our analysis has focused on the actual results of operations for the years ended December 31, 1999, 2000 and 2001 as shown on the publicly available balance sheets, income and cash flow statements of ATT-B and Comcast and the pro forma balance sheet and income statement of AT&T Comcast. This financial information is attached to this report. An integral component of these financial statements are the notes that disclose the detail of debt, property and equipment and other matters. This information has been utilized to project the maturing of debt and estimate other financial components discussed above. Additionally, the details of this transaction as explained in the filings with the SEC and FCC have been reviewed. The financial information of Comcast for the years ended December 31, 2001 shows increases in revenues with increases in expenses at a faster rate. This has resulted in increased income, although operating income before depreciation and amortization as a percentage of revenues has declined fi.om 45.73% in 1999 to 40.04% in 2001. Comcast's cash flow statements show decreases in cash for 2000 and 2001, principally due to capital expenditures. During this period, Comcast has increased its debt by approximately $2.0 billion. Statements in the Amended S-4 and other filings indicate Comcast will have significant capital expenditures in 2002 and a shortfall in cash. Similarly, ATT-B has had a significant shortage of cash in 1999, 2000 and 2001. This has been funded by its parent company, AT&T. Statements in the S-4 show that it will continue in 2002. On a combined basis (Comcast and ATT-B), the S-4 identifies a cash shortfall of $4.452 billion for 2001. As stated in the S-4: Historically, AT&T Broadband Group's capital expenditures have significantly exceeded its net cash provided by operations. For the year ended December 31, 2001, AT&T Broadband Group's capital expenditures exceeded its net cash provided by operations by $3.5 billion. In addition, for the year ended December 31, 2001, Comcast's capital expenditures exceeded its net cash provided by operating activities by $952 milhon. After completion of the AT&T Comcast transaction, AT&T and Comcast expect that for some period of time AT&T Comcast's capital expenditures will exceed, perhaps significantly, its net cash provided by operating activities. This may require AT&T Comcast to obtain additional financing. AT&T Comcast may not be able to obtain or to obtain on favorable terms the capital necessary to fund the substantial capital expenditures described above that are required by its strategy and business plan. A failure to obtain necessary capital or to obtain necessary capital on favorable terms could have a material adverse effect on AT&T ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, ].NC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 5 of 12 Comcast and result in the delay, change or abandonment of AT&T Comcast's development or expansion plans.6 Comcast's 10-K shows significant growth in high-speed Intemet revenues. However, even with this growth, this only represents 5.74% of year 2001 total revenues. The major portion of Comcast revenues is from video services, 83.38%. While Comcast's financial information shows growth in video revenues over the prior year, this needs to be tempered with the fact that Comcast acquired large numbers of new subscribers in 2001 through the following transactions: acquisition of the Baltimore system in June with 112,000 subscribers, 585,000 subscribers from systems acquired from ATT-B in April, and a system swap with Adelphia in January that gained approximately 4,000 subscribers. In December 2000, Comcast exchanged systems with ATT-B gaining approximately 70,000 subscribers. Normally, we try to evaluate the growth in the number of subscribers and the growth in revenue per subscriber. However, this information was not available from public sources and not provided by Comcast. Since the growth figures of Comcast do not show clear year-to-year trends because of the changes from acquisitions, it is not possible to determine the growth rates for subscribers and revenue per subscriber. While it seems reasonable to assume that Comcast will continue to experience growth in high-speed internet within the existing Comcast franchises, there is no data to support what the rate of growth will be. Concerning the ATT-B franchises, Comcast's management clearly anticipates the requirement to spend additional capital to provide these types of services over the ATT-B systems. Likewise, we do not have this information for ATT-B. ATT-B, formerly TCI, was purchased by AT&T Corporation and consolidated into AT&T's financial information in March 1999 as a separately identified business segment. In June 2000, AT&T acquired MediaOne, which was rolled into the ATT-B operating results. As a result of these acquisitions plus additional transactions involving individual systems over the 2 years, year-to-year comparisons at this high level do not yield information that can be used to project future growth. Announced operating results of Comcast and ATT-B for the first quarter of 2002 reportedly shows mixed results. Comcast has told the investment community that its first quarter results from video are its best ever, with increases in high-speed Internet revenues.? However, ATT-B has reported a reduction of approximately 179,000 subscribers from the prior year and a margin of operating income before income taxes, depreciation and amortizations and interest expense of only 19% of revenues,s This is significantly below the margin of the Comcast of 35% to 40%. Assuming average revenue per subscriber of $40 per month, this reduction in subscribers means an annual reduction in revenues of approximately $86 million. The first quarter results seem to indicate that the combined results of Comcast and ATT-B may mirror the 2001 results of a significant shortfall in cash flow, since both Comcast and ATT-B seem committed to their announced levels of capital expenditures, and negative reported income. Amended S-4, p. 1-38. Transcript of May 1, 2002 "First Quarter Earnings Release Conference Call" of Comcast Corporation filed w/th the SEC under Rule 425 on May 2, 2002. April 24, 2002 News Release of AT&T. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, iNC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 6 of 12 ADDITIONAL CONCERNS This discussion addresses additional concerns noted during our review of the'proposed merger. ATT-B Subsidiary Guarantees. First, as disclosed in its financials, ATT-B has guarantees of debt of subsidiaries and unconsolidated joint ventures in the amount of $1.463 billion at December 31, 2001.9 AT&T Comcast assumes responsibility for these guarantees with the merger. While ATT-B discounts its liability, the cable television market has had failures and financial troubles, such as the cun-ent problems with Adelphia. Such an occurrence with these subsidiaries and unconsolidated joint ventures would add additional financial pressures to' AT&T Comcast. Agreements between AT&T-B and AT&T. The following identifies agreements between ATT- B and affiliated companies of AT&T Corporation that survive the proposed merger. Master Carrier Agreement.l° This agreement reflects the rates, terms and conditions on which AT&T's business services group will provide voice, data and Internet services to AT&T Broadband, including both wholesale services (those used as a component in AT&T Broadband's services to its customers) and "administrative" services (for internal AT&T Broadband usage). Pricing is market based, with provisions defining an ongoing process to ensure that the prices remain competitive. First Amended and Restated Local Network Connectivity Services Agreement.n This agreement reflects the rates, terms and conditions on which AT&Ts business services group will provide certain local network connectivity services to AT&T Broadband for use in providing local telephone services to AT&T Broadband's subscribers. This agreement consists of two parts: - a capital lease from AT&T's business services group to AT&T Broadband of certain network switching and transport assets to be used exclusively by AT&T Broadband for a term of up to ten years, commencing January 1, 2001 for initial assets leased under the agreement; and - an operating agreement for the provision of local network connectivity, management and operational services in support of AT&T Broadband's local cable telephone services, with a minimum term of five years commencing January 1, 2001. Master Facilities Agreement? This agreement permits AT&T or any of its subsidiaries to use existing fiber facilities owned or leased by AT&T Broadband or its controlled affiliates, together with related services. In addition, AT&T Broadband will construct and lease to AT&T new fiber facilities in the areas served by AT&T Broadband's cable systems for use in providing telecommunications services. The term of the build-out period will expire on January 8, 2012. Subject to certain termination fights specified in this agreement, the term of AT&T's right to use facilities leased under 9 Amended S-4, p. XII-111. to Amended S-4, p. V-28. n Ibid. 12 Ibid. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 7 of 12 this agreement will expire on January 8, 2028, renewable at AT&T's option for successive 20-year terms in perpetuity. The merged company will be a competitor of AT&T Corporation and carrying these agreements forward into the new company may disadvantage AT&T Comcast in competitive situations. For example, the Local Network Connectivity Services Agreement ("LNS") allows ATT-B to use AT&T facilities in providing local telephone service, while AT&T maintains ownership and control of the facilities and equipment. However, AT&T will also be offering local telephone service. While we do not have .the specific cost information of the LNS because it was deemed confidential, AT&T's fights under the LNS may put AT&T Comcast in a non-competitive situation where AT&T can offer services at less cost than AT&T Comcast. Since we have concluded that AT&T Comcast will have need of additional cash flow, any limitation on the new company's ability to enter new marktts and offer new services raises concerns. We have similar concerns with the Master Facilities Agreement ("MFA"). The MFA allows AT&T unfettered access to the rights-of-way under contract to and used by ATT-B "in perpetuity" or as long as AT&T so desires. Again, ATT-B and AT&T will be competitors. Use of and access to rights-of-way is a major competitive advantage and a very valuable commodity. As with the LNS, we are concerned that the rights granted to AT&T under the MFA could reduce AT&T Comcast's ability to enter new markets and its ability to compete with AT&T. In addition, in most cases, local franchising authorities ("LFAs") do not have franchise agreements with AT&T for use of the public right-of-way ("PROW"). It is conceivable that AT&T Comcast would be in a position of compensating the LFAs for use of the PROW, while AT&T may be offering the same or similar service in the same location and not compensating the LFAs. Of course, this would be less of a concern from a strict financial standpoint if the cost of using the PROW was passed on to AT&T on some reasonable basis. It is nonetheless of concern to local franchising authorities, to the extent that the MFA is being used to avoid franchisee fees, avoid franchising requirements, or to the extent it violates local franchise agreements. It has been highly publicized that a benefit of this merger will be the ability of AT&T Comcast to offer a competitive alternative to the local telephone provider and generate additional revenues from telephone service. However, fourteen MediaOne switches were transferred out of AT&T Broadband Group in 2001 and are not part of the AT&T Broadband Group today? As such, AT&T Comcast will only have access to this equipment if it falls under the LNS and, if so, at the rates and charges of the LNS. Once more, we are concerned about the competitive impact this will have on AT&T Comcast. CONCERNING THE DECLARATION OF ROBERT S. PICK Mr. Pick is Senior Vice President, Corporate Development, at Comcast Corporation. Mr. Pick filed a declaration dated February 27, 2002 with the FCC setting forth: "the major categories of synergies and efficiencies that my staff and I identified in the course of evaluating and negotiating the Merger. These benefits will stem Amended S-4, Schedule 6.27. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 8 of 12 from a number of sources and include the following: (i) accelerated telephony roll-out; (ii) new product development and launch; (iii) programming cost savings; (iv) capital expenditure efficiencies; (v) operating efficiencies; and (vi) national advertising sales.''~4 The following addresses each of the six so-called synergies and efficiencies identified and quantified by Mr. Pick in the order presented in his declaration. Before doing so, however, we note that Mr. Pick did not provide any supporting analyses or documentation for his declaration, repeatedly limited his analysis as "based on my experience in evaluating prior acquisitions" and provided the following disclaimers at the end of each section: - As noted above, this projection depends upon the accuracy of the due diligence data Comcast has received, as well as the actual financial and operational performance of cable telephony in the marketplace? - This estimate depends, of course, upon the actual performance of various new products in ongoing trials and, if launched, in the marketplace, as well as broader economic trends.16 - Achieving these savings will depend upon a number of factors, including the actual terms of specific programming contracts, broader trends in programming prices, and the dynamics of individual negotiations between AT&T Comcast and the sellers of video programming. ~ 7 - Achieving these savings will depend upon a number of factors, including broader trends in prices for capital items and the dynamics of individual negotiations between AT&T Comcast and the sellers of these products? - Achieving these savings will depend upon a number of factors, including the cost and operational structures at the cable division level and the continued competitive impact of DBS and other competitors.~9 - This estimate depends upon numerous factors, including trends in the broader economy and advertising sales.2° For these reasons, Mr. Pick's Declaration cannot be taken at face value, particularly given the failure of Comcast and ATT-B to provide supporting data and Comcast's insistence that it has no data from which it can make projections of operations. Accelerated Telephony Roll-out As noted above in the discussion of Additional Concerns, AT&T Comcast may not be in a competitive position regarding local telephone service. Mr. Pick explains that "AT&T Broadband has devoted significant resources to developing, deploying and marketing cable telephony over the last several years", but it appears from the documents and information Declaration of Robert Pick, filed with the Federal Communications Commission dated February 2, 2002, p.2. Ibid, p. 6. Ibid, p. 7. Ibid, p. 9. Ibid, p. 10. Ibid, p. 11. Ibid, p. 13. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 REVIEW OF THE PROPOSED ]VIERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION Page 9 of 12 provided the majority of telephone assets will continue to reside within AT&T and not be transferred to AT&T Comcast. A&S does not have and was not provided information on personnel, so we do not know if "AT&T Broadband's extensive experience and expertise to accelerate the roll-out of cable telephony" will continue to reside within AT&T or be transferred to AT&T Comcast. As such, the "chum-reduction" benefits and quantification of "an additional $600 to $800 million in EBITDA2~ annually" are suspect. New Product Development and Launch Mr. Pick estimates "the value to AT&T Comcast of developing these new products should be between $100 and $200 million in EBITDA a year within three years.''22 Comcast is an owner and a major participant in Cable Labs. In recent discussions over the last several months, Brian L. Roberts, President, Comcast Corporation, has repeatedly referred to developments of Cable Labs in developing new services, such as digital, video-on-demand ("VOD") and voice over Interact protocol ("VolP"). While the merger will provide a larger subscriber base to support this type of research and development, it is difficult to specifically associate additional revenue generation with this merger. Obviously, Comcast is developing these sources of additional revenue now and would pursue them absent the merger. Accordingly, the basis for Mr. Pick's claim of additional EBITDA from these sources is unclear. Programming Cost Savings Mr. Pick estimates annual savings to AT&T Comcast of $250 to $450 million from reductions in programming costs for the combined entity. This quantification does not seem reasonable based on our experience. A&S has been reviewing cable television rate filings of cable operators since 1993.23 The cost of programming for the Basic Services Tier and the second tier of service, labeled as the Cable Programming Service Tier by the FCC, has been provided as components of these rate filings. In some cases, the costs of the individual channels have been identified. From these reviews, there has been little fluctuation in the per subscriber rates between cable providers and some of the difference has related to different timing of contracts. We agree that there exist volume discounts in some programming contracts, but it has been our experience that the increases in these discounts with increasing volume become very small as the number of subscribers approaches 10 million. In addition, A&S has specifically examined the programming costs of Comcast and of AT&T Broadband; we do not agree that savings of the magnitude represented by Mr. Pick are possible under the existing agreements. Nor do we believe that AT&T Comcast will be in a position to negotiate better rates for programming as a result of the merger. Such an argument ignores two things. First, many of these contracts are for multiple years and will survive the merger. AT&T Comcast's ability to negotiate better rates will not be known until the contracts are renewed. And second, our experience is that size has not mattered in the price of programming. We have reviewed rates of small cable systems that are consistent with rates of large systems. In some cases, the major 2~ EBITDA is earnings (operating income) before interest, income taxes, depreciation and amortizations. 22 Declaration of Robert Pick, p. 7. 23 More specifically, Mr. Ashpaugh has reviewed these filings while he was with prior employers since A&S was only formed December 1, 1999. Mr. Ashpaugh has been working in cable rate matters since 1993. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 Page 10 of 12 REVIEW OF THE PROPOSED ]V[ERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION ~-- difference related to a volume discount, which decreased markedly or disappeared as the number of subscribers approached 10 million.24 It should also be noted that Comcast owns programming content that it places on its own systems, such as E!, Outdoor Channel, Golf Channel, and QVC, and has stated that it anticipates adding this programming on the ATT-B systems. ATT-B has ownership of programming content through its 25% interest in Time Warner Entertainment, commonly referred to as TWE. Obviously, any decrease in the cost of its own content to affiliates will reflect negatively on the earnings of the content provider and ultimately the parent company or the owners. Capital Expenditure Efficiencies Mr. Pick quantifies this savings as $200 fo $300 million annually to AT&T Comcast. First, it appears that Mr. Pick has quantified this component incorrectly. He states that there will be a 5% to 7% savings, resulting in the $200 to $300 million annually. A major component of the capital expenditures of Comcast and ATT-B relate to construction within their respective systems. A large component of the cost of construction, however, is labor, which is usually specific to the region and its local economy and not the size of the company. Thus, the single largest component of the new company's capital expenditures will be unaffected by the merger. In addition, as discussed above, A&S has reviewed cost information associated with cable rate filings since 1993. A cost component of these equipment rate filings is the cost of converters, analog and digital, referred to by Mr. Pick as set-top boxes. We have reviewed the costs of such equipment, and concluded that Comcast and ATT-B have little, if any difference, in the costs of like equipment. Based on that, I do not agree that any savings in capital expenditures could be of this scale. In addition, the companies are already so large that any reductions in cost through volume purchases are unlikely to be substantial. Operating Efficiencies Mr. Pick estimates the impact of this to be $200 to $300 million annually on AT&T Comcast's EBITDA after one to three years? Mr. Pick states "AT&T Comcast should be able to decrease the aggregate mount of overhead currently spent by AT&T Broadband and Comcast for corporate services, such as corporate management, corporate development, strategic development, treasury, accounting, tax, and in-house legal service.s. Currently all of these functions are performed separately by or for both companies.''26 ATT-B is part of a larger company. As disclosed in the footnotes to the financial statements in the Amended S-4, AT&T allocates general corporate overhead expenses, including finance, legal, marketing, use of the AT&T brand, planning and strategy and human resources to AT&T Broadband Group, as well as costs for AT&T employees who directly support the activities of the AT&T Broadband Group. Charges for such services amounted to $146, $159 and $120 for the years ended December 31, 2001 and 2n It should be noted that specific cost information for programming has been requested to be confidential by several cable providers including Comcast and ATT-B. As such, we can only generally discuss this issue. 25 Declaration of Robert Pick, p. 11. 26 Ibid, p. 11. ASHPAUGH & SCULCO, CPAS, PLC May 24, 2002 Page 11 of 12 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FORM AT&T COMCAST CORPORATION --- 2000 and for the ten months ended December 31, 1999, respectively. These amounts are included in selling, general and administrative expenses in the accompanying combined statements of operations and were determined based on methodology described in note 1.27 (Amounts shown are in millions.) As such, we acknowledge that there would be a reduction of $146 million in ATT-B's expenses for 2001. On the other hand, while Comcast's costs for these functions could be spread over a larger base, they will not be decreased. In fact, arguments have been made by experts in the industry evaluating this merger that Comcast will have to add significant numbers of additional staff including attorneys and other professionals.28 Additionally, as part of this merger, C. Michael Armstrong, Chairman and Chief Executive Officer, AT&T Corporation leaves AT&T to become Chairman of the Board of AT&T Comcast. Mr. Armstrong's compensation was in excess of $10.6 million in 2001.29 This amount plus the costs of any other executive personnel transferring from AT&T or hired would need to be offset against the reductions. For these reasons, we do not believe Mr. Pick's quantification of the impact of the operating efficiencies gained from the merger is reasonable. National Advertising Sales Mr. Pick estimates AT&T Comcast "will be able to achieve $100 to $200 million in increase EBITDA annually from the sale of national advertising within one to three years after the Merger.''3° I disagree with Mr. Pick. Comcast and ATT-B participate in national advertising and generate significant revenues from such advertising. Comcast and ATT-B are part of the consortium of cable owners of National Cable Communications, Inc., commonly referred to in the industry as NCC? When Comcast records advertising on its books, it labels it "National Advertising NCC". ATT-B, formerly as TCI, has owned a portion of NCC for many years and was the first MSO (multiple system operator) owner, through its affiliate, AT&T Media Services. While AT&T Media Services sells regional advertising for all of the ATT-B systems, NCC has an exclusive contract for all national advertising. It is our understanding that NCC also has such an exclusive contract with Comcast. NCC's purpose is to sell national advertising on cable networks. For example, according to it's website, NCC has the capability to insert ads directly onto a number of cable networks and lists links to 37 cable networks on its website. The cable industry has taken advantage of opportunities in national advertising for many years. Associating increases in national advertising revenues as a benefit of this merger does not seem appropriate. The November 19, 2001 article "NCC's New-Business Push Pays Off' in the Multicharmel News touts NCC's ability to capture national advertising and its plans to expand its push in 2002. In addition, we do not believe that AT&T Comcast would be able to command more revenue from advertisers simply because it has a higher number of subscribers. The rates for advertising are driven by the number of viewers of a particular program. The combined 27 Amended S-4, p. XII-123. 28 May 6, 2002 Broadcasting & Cable "More than it can swallow? Turning AT&T Broadband around may be harder than Comcast expects" by John M. Higgins. 29 Amended S-4, p. XIV-24. 3o Declaration of Robert Pick, p. 12. 3~ See "About NCC" at its website www.spotcable.corn/asp/abo/default.asp. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 Page 12 of 12 REVIEW OF THE PROPOSED MERGER OF AT&T BROADBAND, INC. AND COMCAST CORPORATION TO FOP, M AT&T COMCAST CORPORATION - company's total number of viewers will not change because of the merger. It is conceivable that AT&T Comcast may be achieve some operating efficiencies in managing this side of its business, but it is not appropriate to attribute additional revenue to this specifically fi.om the merger. CONCLUSION The proposed merger will increase the pressures on local systems to control cash. Comcast and ATT-B centrally manage cash within their respective companies, "sweeping" local deposits to individual locations that manage the cash within each company. The need to fund maturing debt, provide operating funds (working capital) and fund capital expenditures will require AT&T Comcast to increase the mount of debt annually through at least 2006. This could result in a significant debt load in excess of $40.0 billion. Without substantial increases in revenues, this level of debt will jeopardize the ability of the combined company to meet on- going fi.anchise obligations. Even if AT&T Comcast is able to complete the required upgrade and rebuilding of systems in the short term, its ability to properly maintain systems and conduct future upgrades is in question. Therefore, in evaluating this merger fi'om a financial perspective, we do not see this merger as beneficial to any of the existing franchises, at least for the period through 2006, and possibly beyond. The franchises currently served by Comcast will go fi.om a company currently touted as being in the strongest financial position of any of the cable multiple system operators ("MSOs") to a company, AT&T Comcast, with a large amount of debt and significant shortages in cash flow. Franchises currently served by AT&T Broadband will go from a company with significant debt and shortages in cash flow to company with even more debt and greater shortages in cash flow. Comcast has stated that, once the AT&T-B systems have been rebuilt or upgraded to the same level as its own systems, AT&T Comcast's capital needs will decrease, revenues will increase, and cash flow will increase leading to a reduction in debt. We simply cannot evaluate that claim based on the information provided by the companies. If they have done any quantitative analysis of this issue, they have not made it available, and thus any conclusions we could draw on that point would be purely speculative. Indeed, we can only conclude that any such claims are mere speculation. Therefore, although we have no basis for saying that the debt load of AT&T Comcast will increase after 2006, neither can we say when it will decrease. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 ATTACHMENTS o o o Balance Sheets of AT&T Broadband, Inc., Comcast Corporation & Pro Forma AT&T Comcast Corporation at December 31, 2001. Income Statements of AT&T Broadband, Inc., Comcast Corporation & Pro Forma AT&T Comcast Corporation for the Year Ended December 31, 2001. Income Statements of AT&T Broadband, Inc. Statements of Cash Flow of AT&T Broadband, Inc. Co{nparative Income Statements of Comcast Corporation for the Years Ended December 31, 1999, 2000 and 2001. Statement of Cash Flow of Comcast Corporation for the Year Ended December 31, 2001. Comcast Corporation Summary of Results of Operations for the Years Ended December 31, 1999, 2000 and 2001. ASHPAUGH & SCULCO, CPAs, PLC May 24, 2002 Review of Proposed Merger of Comcast & AT&T Broadband Balance Sheet of AT&T Broadband, Comcast Corporation & Pro Forma AT&T Comcast at December 31, 2001- (Dollars in Millions) HISTORICAL PRO FORMA HISTORICAL AT&T ADJUSTMENTS PRO FOR/VIA COMCAST (A) BROADBAND (A) i PER S-4 AT&T COMCAST ASSETS CURRENT ASSETS Cash and cash equivalents 350.00 350.00 Investments 2,623.20 668.00 3,291.20 Accounts receivable, net 967.40 584.00 1,551.40 Inventories, net 454.50 454.50 Other current assets 153.70 398.00 57.50 609.20 Total current assets 4,548.80 1,650.00 57.50 6,256.30 INVESTMENTS 1,679.20 21,913.00 1,801.60 23,692.80 (1,701.0o) PROPERTY AND EQUIPMENT, net 7,011.10 14,519.00 21,530.10 INTANGIBLE ASSETS Goodwill 7,507.30 20,102.00 (1,500'50) 26,108.80 Cable franchise operating rights 20,167.80 45,320.00 (2,501.00) 62,986.80 Other intangible assets 2,833.40 2,833.40 30,508.50 65,422.00 (4,001.50) 91,929.00 Accumulated amortization (5,999.20) (3,242.00) 3,242.00 (5,999.20) 24,509.30 62,180.00 (759.50) 85,929.80 OTHER NON-CURRENT ASSETS, net 383.40 2,925.00 57.50 3,365.90 TOTAL ASSETS 38,13 !.80 103,187.00 (543.90) 140,774.90 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable 698.20 678.00 1,376.20 Accrued expenses and other current liabilities 1,695.50 2,169.00 1,024.60 4,889. I0 Deferred income taxes 275.40 275.40 Short-term debt 3,959.00 57.50 3,091.70 (924.80) Current portion of long-term debt 460.20 2,824.00 (2,109.40) i, 174.80 Total current liabilities 3,129.30 9,630.00 (1,952.10) 10,807.20 LONG-TERM DEBT, less current portion 11,741.60 16,502.00 357.50 31,528.60 (106.70) 3,034.20 DEFERRED INCOME TAXES 6,375.70 25,810.00 291.50 32,298.20 (179.00) OTHER NON-CURRENT LIABILITIES 1,532.00 1,059.00 (274.10) 2,316.90 MINORITY INTEREST 880.20 3,302.00 (2,100.00) 2,082.20 Company-Obligated Convertible Quarterly Income Preferred Securities of Subsidiary Trust Holding Solely Subordinated Debt Securities of AT&T 4,720.00 (4,720.00) 0.00 STOCKHOLDERS' EQUITY Common stock 945.10 1,346.00 2,243.80 (47.30) Additional capital 11,752.00 (1,653.70) 57,722. ! 0 47,623.80 Retained earnings 1,631.50 1,63 i.50 Accumulated other comprehensive income 144.40 144.40 Combined attributed net assets 42,164.00 (42,164.00) 0.00 Total stockholders' equity 14,473.00 42,164.00 5,104.80 61,741.80 TOTAL LIABILITIES & EQUITY 38,131.80 103,187.00 (543.90) 140,774.90 Ashpaugh Sculco, CPAs, PLC May 24, 2002 Review of Proposed Merger of Comcast & AT&T Broadband Income Statement of AT&T Broadband .__ (Dollars in Millions) No Description 1 Revenues $5,080 $8,445 $10,132 2 Operating Expenses: 3 Cost of Service $2,686 $4,600 $5,459. 4 Selling, General & Administrative 1253 2180 2582 5 Depreciation 663 1291 1881 6 Amortization of Goodwill, Franchise Costs & Other Intangibles 869 2377 2154 7 Other Amortization 142 383 745 8 Asset Impairment, Restructuring & Other Charges 644 6270 1494 9 Total Operating Expenses $6,257 $17,101 $14,315 10 Operating Income (Loss) ($1,177) ($8,656) ($4,183) 11 Investment Income (Expense) 47 -84 - 1947 12 Other Income (Expense) 3 45 -927 13 Interest Expense -705 -1323 -1735 14 ~Iet Income (Loss) Before Income Taxes, Net Losses From Equity Investments ($1,832) ($10,018) ($8,792) 15 Benefit for Income Taxes 465 1183 3857 16 Net Income (Loss) From Equity Investments -707 -597 -69 17 Minority Interest Income (Expense) -126 4062 833 18 Net Income (Loss) Before Cumulative Effect of Accounting Change ($2,200) ($5,370) ($4,17 19 Effect of Accounting Change 0 0 371 20 Income Taxes From Accounting Change 0 0 (142) 21 Net Income (Loss) ($2,200) ($5,370) ($3,942) 22 Net Revaluation of Financial Inslxuments 105 (2,180) (974} 23 Income Taxes From Revaluation of Financial Instruments (36) 778 375 24 Recognition of Previously Unrealized Losses 0 175 2,305 25 Income Taxes From Previously Unrealized Losses 0 (29) (89 26 Minimum Pension Liability Adjustment 0 0 (3 27 Income Tax From Pension Liability Adjustment 0 0 16 28 Other Comprehensive Income 0 7 36 29 Income Tax From Other Comprehensive Income 0 0 (7) 30 Total Comprehensive Income (Loss) (2,131) (6,619) (3,1 Per Amended S-4 Ashpaugh Sculco, CPAs, PLC May 24, 2002 Review of Proposed Merger of Comcast & AT&T Broadband Statements of Cash Flow AT&T Broadband (Dollars in Millions) No. Description ~{~!!~!~ :.!iiiiiiiiii2;O~!! ::?:?:ii !ii i iii i 2~0~! i i ! ii~ I Net Income (Loss) (2,200.0) (5,370.0) (3,942.0) Adjustments to Reconcile Net Loss to Net Cash (Used In) Provided by Operating 2 Cumulative Effect of Accounting Change, Net of Income Taxes 0.0 0.0 (229.0) 3 Net Losses (Gains) on Sales of Businesses & Investments (39.0) (616.0) 710.0 4 Asset Impairment, Restructuring & Other Charges, Net of Cash Payments 594.0 6,216.0 1,370.0 5 Depreciation 663.0 1,291.0 1,881.0 6 Amortization of Goodwill, Franchise Costs & Other Intangibles 869.0 2,377.0 2,154.0 7 Other Amortization 142.0 383.0 745.0 8 Provision for Uncollectible Receivables 75.0 154.0 246.0 9 Net Losses From Equity Investments 1,145.0 967.0 106.0 10 Deferred Income Taxes (422.0) (880.0) (3,579.0) 11 Impairment of Investments 0.0 240.0 539.0 12 Put Option Settlement and Mark-to Market Charge 0.0 537.0 838.0 13 Minority Interest (Income) Expense 180.0 (4,039.0) (872.0) 14 Net Revaluation of Certain Financial Instruments 0.0 0.0 959.0 15 Decrease (Increase) in Receivables (116.0) (263.0) 57.0 16 (Decrease) Increase in Payables 447.0 (90.0) (515.0) 17 Net Change in Other Operating Assets & Liabilities 143.0 (298.0) (635.0) 18 Other Adjustments, net ( ! 01.0) 193.0 64.0 19 Net Cash (Used In) Provided By Operating Activities 1,.380.0 802.0 (103.0) Investing Activities: 20 Capital Expended For Property & Equipment, Net of Proceeds From Disposal (3,161.0) (4,426.0) (3,413.0) 21 Sales of Marketable Securities 0.0 96.0 102.0 22 Purchase of Marketable Securities 0.0 (14.0) (18.0) 23 Investment Distributions and Sales 817.0 578.0 1,429.0 24 Investment Contributions and Purchases (1,308.0) (593.0) (276.0) 25 Net Cash Received (Paid) for Acquisition & Dispositions of Businesses 740.0 (71.0) 4,898.0 26 Other Investing Activities, net (3.0) (81.0) (179.0) 27 Net Cash Provided By (Used In) Investing Activities (2,915.0) (4,511.0) 2,543.0 Financing Activities: 28 Proceeds From Long-term Debt Issuances 0.0 3,862.0 1,025.0 29 Issuance of Convertible Securities 4,638.0 0.0 0.0 30 Retirement of Long-term Debt (2,031.0) (1,429.0) (938.0) 31 Retirement of Redeemable Securities 0.0 (152.0) 0.0 32 Dividends Paid on Preferred Securities (135.0) (294.0) (336.0) 33 Change is Short-term Debt Due to AT&T 4,297.0 1,533.0 (2,252.0) 34 Transfers From (To) AT&T, net (5,234.0) 765.0 0.0 35 Other Financing Activities, net 0.0 (515.0) 0.0 36 Net Cash (Used In) Provided By Financing Activities 1,535.0 3,770.0 (2,501.0) 37 Net Change in Cash 0.0 61.0 (61.0) 38 Cash & Cash Equivalents at Beginning of Period 0.0 0.0 61.0 39 Cash & Cash Equivalents at End of Period 0.0 61.0 0.0 Ashpaugh Sculco, CPAs, PLC May 24, 2002 COMCAST CORP Comparative Income Statements For The Years Ended December 31, 1999, 2000 and 2001 --- (Millions) Year Ended Year Ended Year Ended Line December 31, December 31, December 31, No. 2001 2000 1999 REVENUES 1 Service revenues 5,756.9 4,682.7 3,361.8 2 Net sales from electronic retailing 3,917.3 3,535.9 3,167.4 3 9,674.2 8,218.6 6,529.2 COSTS AND EXPENSES 4 Operating (excluding depreciation) 2,905.8 2,212.5 1,663.1 5 Cost of goods sold from electronic retailingC(excluding depreciation) 2,514.0 2,284.9 2,060.0 6 Selling, general and administrative 1,552.6 1,250.9 926.1 7 Depreciation 1,141.8 837.3 572.0 8 Amortization 2,306.2 1,794.0 644.0 9 10,420.4 8,379.6 5,865.2 10 OPERATING INCOME (LOSS) (746.2): (161.0) 664.0 OTHER INCOME (EXPENSE) 11 Interest expense (731.8)! (691.4) (538.3) 12 Investment income 1,061.7 983.9 629.5 13 Income (expense) related to indexed debt 666.0 (666.0) 14 Equity in net income (losses) of affiliates (28.5) (21.3) 1.4 15 Other income 1,301.0 2,825.5 1,409.4 16 1,602.4 3,762.7 836.0 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME 17 TAXES, MINORITY INTEREST, EXTRAORDINARY ITEMS AND 856.2 3,601.7 1,500.0 CUMULATIVE EFFECT OF ACCOUNTING CHANGE 18 INCOME TAX EXPENSE (470.2) . (1,441.3) (723.7) INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY 19 INTEREST, EXTRAORDINARY ITEMS AND CUMULATIVE 386.0 2,160.4 776.3 EFFECT OF ACCOUNTING CHANGE 20 MINORITY INTEREST (160.4) (115.3) 4.6 INCOME FROM CONTINUING OPERATIONS BEFORE 21 EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF 225.6 2,045.1 780.9 ACCOUNTING CHANGE GAIN FROM DISCONTINUED OPERATIONS, net of income 22 335.8 tax expense of $166.1 INCOME BEFORE EXTRAORDINARY ITEMS AND CUMULATIVE 23 EFFECT OF ACCOUNTING CHANGE 225.6 2,045.1 1,116.7 24 EXTRAORDINARY ITEMS (1.5) (23.6) (51.0) 25 CUMULATIVE EFFECT OF ACCOUNTING CHANGE 384.5 26 NET INCOME 608.6 2,021.5 1,065.7 27 PREFERRED DIVIDENDS (23.5) (29.7) 28 NET INCOME FOR COMMON STOCKHOLDERS 608.6 1,998.0 1,036.0 Information per Comcast Corporation's SEC 10-K filed March 29, 2002. Ashpaugh Sculco, CPAs, PLC May 24, 2002 COMCAST COKP Summary of Results of Operations for Years Ended December 31, 1999, 2000 and 2001 Year Ended Year Ended Year Ended Line December 31 December 31, December 3 i No. Description 2001 Increase Over Prior Year 2000 Increas~ Over Prior Year 1999 I Video $4,278.2 $626.9 17.17% $3,651.3 $1,062.4 41.04% $2,588.9 2 High-speed lntemet $294.3 $179.9 157.26% $114.4 $69.9 157.08% $44.5 3 Advertising salas $325.3 $35.1 12.10% $290.2 $99.9 52.50% $190.3 4 Other $232.9 $80.3 52.62% $152.6 $6.4 4.38% $146.2 5 Revenues $5,130.7 $922.2 21.91% $4,208.5 $1,238.6 41.71~ !"' $2,969.9 6 Operating, selling, general and administrative expenses $3,076.6 $771.5 33.47% $2,305.1 $693.2 43.01% $1,61 !.9, 7 Operatin~ income before depreciation and amortization $2,054,1 $150.7 7.92% $1,903.4 $545.4 40.16% $1,358.0 % of Total 8 Video 83.38% 86.76% 87.17oh 9 High-speed lntemet 5.74% 2.72%, 1.50~ 10 Advertising sales 6.34% 6.90% 6.41% 11 Other 4.54% 3.63% 4.92% 12 Revenues 100.00% 100.00% 100.00% 13 Operating, selling, general and administrative expenses 59.96% 54.77% 54.27% 14 Operatin~ income before depreciation and amortization 40.04% 45.23% 45.73% Information per Comcast Corporation's SEC 10-K filed March 29, 2002. Ashpaugh Sculco, CPAs, PLC May 24, 2002 CITY COUNCIL LETTER MEETING OF: JULY 22, 2002 AGENDA SECTION: ORIGINATING DEPT: CITY MANAGER NO: ~'-~' d' I FINANCE APPROVAL ITEM: FINANCIAL ANALYSIS BY: WlLLIAM~.~E BY~~~ PROFESSIONAL SERVICES DATE: 07/1 '~0021"~/2 CONTRACT NO: At the City Council meeting of June 24, staff proposed entering into a financial analysis contract with Springsted for the review of the City's proposed purchase of property to build and relocate a liquor store. As a historic note, the proposal was requested from Springsted as they have been the City's financial advisor on bond issues for several years. Prior to Springsted, the City utilized the services of Miller-Schroeder. At that time, the City had an exclusive contract with Miller-Schroeder for financial advisor service and for bond underwriting services. Under that contract the City did not solicit proposals for quotes for financial advisor services and we did not solicit quotes on bond sales, we had an exclusive underwriting agreement with Miller-Schroeder. Several years ago Miller-Schroeder abandoned this service and sold the financial advising aspect to Springsted. Ever since that time we have utilized the services of Springsted for financial advice regarding bond sales. Based on the discussion at the City Council meeting, we have solicited a competitive proposal from Ehlers & Associates, who the City has utilized for some EDA financial advice. Attached are both proposals. As you can see, the proposal from Ehlers is in a range of $3,500 to $7,500 and if we utilize them for the issuance of debt service, they will credit $3,500 of the cost of the initial analysis to their standard fee on the financing option. Based on this, Ehlers cost would be less than Springsted to perform a financial evaluation. It is staff's opinion that both companies are well qualified and would provide a good service to the City. However, the proposal from Ehlers & Associates does go beyond the Springsted proposal as it covers the evaluation of both the relocation of the Central Avenue and University Avenue stores. Also, the time frame for Ehlers to complete this work is 4-6 weeks versus 8-10 weeks with Springsted. RECOMMENDED MOTION: Move to authorize the Mayor and City Manager to enter into an agreement with Ehlers & Associates based on their proposal to evaluate the City's plan to relocate the City's liquor stores on Central and University Avenues. ALTERNATE RECOMMENDED MOTION: Move to authorize the Mayor and City Manager to enter into an agreement with Springsted based on their proposal of June 26, 2002 to evaluate the City's plan to relocate the Central Avenue liquor operation. WE:sms 0207182COUNCIL Attachments COUNCIL ACTION: Liquor Store Relocation Financial Analysis Columbia Heights, Minnesota Work Plan Objective The purpose of this study is to provide, an independent review of the potential relocation of the Top Valu Liquor Store and Heights Liquor for the Columbia Heights City Council. Timing Studies of this nature typically require between 4 to 6 weeks from the time of receipt of required information or receipt of the signed agreement to completion. Delays in the receipt of information or in the coordination of meetings may extend the timing. At the completion of the study, the final draft, both paper and electronic will be delivered to the City. Tasks 7. 8. 9. Review of potential sites and identification of pro's and con's for each of the sites/options already identified by City staff through their internal market analysis: a. Continuation of lease for existing sites. b. Purchase of property with rental potential. c. Build new on prospective sites identified by City. Develop financing options for each site such as use of existing reserves and bonding options. Review and refinement of the financial pro-forma of the proposed sites prepared by City staff and preparation of pro-forma financial information for the remaining options. This review will cover revenues and expenditures by major categories, financing options and common area maintenance costs. Review traffic study information prepared by City staff. Establish a meeting with appropriate City staff and other consultants involved in the project to discuss all materials as a basis for undertaking Phase II of the study. Utilize cost data developed by the City's real estate consultants. Draw upon cost data developed in other similar studies. Prepare a projected capital and operating cost for each option. Finalize a report that provides the City Council definitive options for decision. Columbia Heights, Minnesota Liquor Store Relocation Financial Analysis We will use a participatory process that will include City Council, staff and the community when appropriate in making the decision regarding the City's liquor store(s) and their future direction. We will meet with other consultants on an as needed basis. We will keep staff regularly updated as to the project status. We have included in our cost three meetings with staff and two meetings with the City Council during the process. Compensation: We propose to complete the financial analysis, in accordance with the scope of services detailed above, for houdy compensation (detailed below) in an amount between $3,500 - $7,500 (exclusive of any out-of-pocket expenses such as travel and copying which will be billed separately). We may use the services of a qualified sub-contractor with the approval of the City Manager. The actual expense will depend largely upon the City's required number of meetings with staff and the City Council. If the analysis results in the issuance of debt to finance any improvements, we will credit $3,500 of the costs of the initial analysis from our standard fees on the financing option which the City chooses. Should the City request and authorize additional work outside the scope of services described in this work plan or additional on-site meetings, we would invoice the City at our standard hourly fees (detailed below). Name Rate Mark Ruff Shelly Eldridge Jim Prosser Liz Diaz Any clerical $150 $150 $150 $125 No charge Mark Ruff, Executive V.P./Director Ehlers and Associates, Inc. Walter Fehst, City Manager City of Columbia Heights Page 2 CITY COUNCIL LETTER MEETING OF: JULY 22, 2002 AGENDA SECTION: ORIGINATING DEPT: CITY MANAGER NO: -'7- C - ") FINANCE APPROVAL ITEM: PURCHASEcENTRAL AVENuEOF PROPERTYLiQuoRFOR BY: W. IL~I,~ _E_...._LRITE~j~~ BY~ ,~,~,~//~f~~.~ STORE DATE: 07Y'I'8/2002 NO: This council letter is a follow-up to previous discussions and the City Council work session of July 15, 2002. To briefly summarize, the City entered into an agreement in September 2001 with TGS Partnership to research and locate possible properties for a new liquor store location on Central Avenue and University Avenue. For several months staff has been reviewing the results of their search and the only real feasible alternative on Central Avenue is the Savers' building. The Solz brothers from TGS Partnership have talked to the owner of the building and have received an indication that they would be willing to accept a contingent offer. Attached is a list of the contingencies that would be placed in this offer. As you can see from this list, if the City Council is not receptive to the results and evaluation of the financial feasibility of this location, we can withdraw from the contingent offer and get our promissory note back. At the present time, the property is publicly being offered for sale. The contingent offer would simply tie the property up to allow the City 60 to 90 days to make a decision as to whether or not we want to pursue it further. With the contingencies included, we could withdraw at any point during the contingency time frame. As was discussed at the work session, the Solz brothers are currently working on drawing up a contingency proposal for the purchase of property on University Avenue. It is our goal to have that contingency offer available for review at the next City Council work session. RECOMMENDED MOTION: Move to authorize the Mayor and City Manager to enter into a contingency offer for the Central Avenue property based on the contingencies listed on the attached document. WE:sms 0207181 COUNCIL Attachment COUNCIL ACTION: PROPOSAL FOR PURCHASE OF CENTRAL AVENUE PROPERTY PURCHASE PRICE: DOWN PAYMENT: $3,000,000 $100,000 promissory note CONTINGENCIES: ACCEPTANCE BY SAVERS TO GIVE UP 4,000 SQUARE FEET TO ALLOW RETAIL AND STORAGE SPACE FOR LIQUOR STORE OF 12,000 SQUARE FEET. ACCEPTANCE BY HOLLYWOOD VIDEO TO FIND SPACE ELSEWHERE OR TO MOVE INTO A NEW BUILDING TO BE ERECTED ON THE CORNER PAD SPACE AT 49TM AND CENTRAL. UP TOA 90 DAY WINDOW TO SATISFY THE ABOVE CONTINGENCIES. IN THE EVENT ANY OR ALL OF THE ABOVE CONTINGENCIES ARE NOT MET, THE ENTIRE $100,000 PROMISSORY NOTE WILL BE RETURNED AND NO FURTHER OBLIGATIONS WILL BE INCURRED BY THE CITY OF COLUMBIA HEIGHTS. CITY COUNCIL LETTER WORK SESSION OF: JULY 15, 2002 AGENDA SECTION: ORIGINATING DEPT: CITY MANAGER NO: Work Session Discussion Document FINANCE APPROVAL ITEM: PURCHASE OF PROPERTY ON BY: WILLIAM ELRITE BY: CENTRAL AVENUE FOR A LIQUOR STORE DATE: 07/11/2002 NO: As a follow-up to our previous meetings and discussions with the Solz brothers and Bob Thistle from Springsted, staff is proposing to purchase the Central Avenue property. TGS Parmership, who was hired by the City in September of 2001, has researched several possible properties on Central Avenue. Due to location and price, the Savers's property appears to be the best potential location for a liquor store and appears to be the most cost-effective solution to relocating. At the work session on July 15, staff will have a handout showing the proposed purchase amount and contingencies related to the Purchase Agreement. As you may recall, staff previously recommended that the City contract with Springsted to carry out a more in-depth evaluation of the ramifications of purchasing this property versus other property and building a stand-alone store versus the current rental program. This proposal was formally presented to the council at the July 8 meeting and did not pass. The proposal will be brought back at the July 22 council meeting. Although staff has reviewed the financial ramification of this proposal, it is also felt that it would be beneficial to have Springsted do a re-re-review of the financial ramifications. Staff will be available at the work session to discuss the advantages of owning our own store versus renting along with the advantages of having a more visible location. We only have 2-1/2 years left on our current lease at 43 TM and Central. The lease does have one 5-year extension provision but it does not apply if we are in default under the current lease. At the present time Heritage has notified us that they consider us to be in default as we have refused to pay approximately $20,000 in undocumented CAM expenses. The bottom line is that in 2-1/2 years we could be without a liquor store on Central Avenue. Staff may have more information by Monday night regarding the location on University Avenue. Currently the Solz brothers are negotiating on the City's behalf for a prime location on University Avenue. We have stressed to them the council's desire to move rapidly on the University Avenue location along with the benefits of trying to do both locations at the same time. WE:sms 020711 ICOUNCIL COUNCIL ACTION: Council Letter July 17, 2002 Case #2002-0705-06 CITY COUNCIL LETTER Meeting of: July22, 2002 AGENDA SECTION: Items for Consideration ORIGINATING DEPT.: CITY MANAGER NO: 7 - {"..-- 3 Community Development/~APPROVAL ITEM: Case # 2002-0705-06 BY: Tim Johnson BY: / .~~ NO: Approval of Preliminary and Final Plat for DATE: July 17, 2002 Parkside Village at 825 51st Avenue NE Issue Statement: This is a request for Preliminary and Final Plat approval of Parkside Village, a 2.4 acre owner-occupied 25 unit market rate townhome subdivision that Nedegaard Custom Homes is proposing to split off from St. Timothy's Lutheran Church property. Background: The property was intended to be developed into high-density senior housing in 1998, but the project idea failed. The proposed townhome idea has been looked at for the last few years, but never materialized until just recently. Analysis: The attached staff report contains a technical zoning analysis for the proposed project. In short, the project contains 25 for-sale market rate townhome units. Each unit features 2 bedrooms, 2 baths, and an attached two-car garage. The visual interest of these units will be complemented with a pedestal type post design and will feature brickwork, shakes, dormers, and both at-grade and second floor patios (see renderings). Each lot will be platted individually according to the building footprint, and will share open space and common areas, including a walking path around the development through a Home Owner's Association. Note, the developer has submitted an attractive landscaping plan that exceeds the minimum plantings required by ordinance. The proposed access to this development will rely solely on 51 st Avenue and Outlot A, which is entirely on this property, and not a shared park road as previously envisioned. The Planning Commission at their July 9~ meeting, reviewed and approved the project with several contingencies. Even though not required by ordinance, one issue that was addressed at this meeting was a lack of visitor parking, of which six spaces have now been added to the site. It should be noted that the Planning Commission also discussed park needs, and recommended that park dedication fees of $750.00/unit be required, of which they recommended be used for the improvement of Sullivan Lake Park facilities. In addressing open space concerns, Nedegaard has contacted Medtronic and is pursuing an agreement to make a connection to the Medtronic walking pathway, which would allow for a pedestrian connection to the Medtronic and Sullivan Lake pathways. Staff has also put together a Development Agreement spelling out requirements and responsibilities of the City and Developer (see attached). Public Works and the Fire Department have both reviewed site, grading, and utility plans extensively, and indicated that the minimum requirements have been met. However, there are a few minor issues that will need follow up (see attached). Recommendation: During their meeting on July 9, 2002, the Planning and Zoning Commission reviewed the proposal and voted to recommend City Council approval of the Preliminary and Final Plat subject to certain conditions. Recommended Motions: Move to approve the preliminary and final plat for Parkside Village, as the proposed plat is consistent with City Subdivision Ordinance and is consistent with the City Comprehensive Plan. Move to approve the preliminary and final plat for Parkside Village and all that identified on the plat submitted at 825 51st Avenue NE subject to the following conditions. Council Letter July 17, 2002 Case #2002-0705-06 2. 3. 4. 5. City Engineer review and approval of Final Plat, and any changes deemed necessary. Park dedication fees of $750.00 per unit, and that such fees be used to improve Sullivan Lake Park. Fire Department review and approval of Final Plat and any changes deemed necessary. Development Agreement defining requirements and responsibilities of City and developer. Developer required to make a trail connection to the Medtronic and Sullivan Lake pathways. ~lttachments: Prel & Final Plat; Utilities, Grading & Landscaping Plan; Bldg Plans; Pl Comm staff report; Development Agreement; Fire D~ ~>t Memo; Public Works Memo; COUNCIL ACTION: Case: 2002-0705-06 Page: 1 STAFF REPORT TO THE PLANNING AND ZONING COMMISSION FOR THE JULY 9, 2002 PUBLIC HEARING Case #'s: 2002-0705-06 GENERAL INFORMATION Owner: Bruce Nedegaard Applicant: Address: 4200 Central Ave NE Columbia Heights, MN 55421 Humphrey Engineering 145 Main St PO Box 252 Woodville, WI 54028 (715) 698-3440 Parcel Address: 825 51st Avenue NE Zoning: Zoned R-3, Multi-Family Residential Comprehensive Plan: I-[DR - High Density Residential Surrounding Zoning and Land Uses: Zoning North: GB South: R-1 and R-2 East: GB West: R-3 Land Use North: Commercial South: Residential East: Commercial West: Sullivan Lake Pk BACKGROUND Explanation of Request: This is a request for Site Plan, and Preliminary and Final Plat approval of Parkside Village (not St. Timothy Heights as originally indicated), a 2.4 acre owner-occupied 25 unit market-rate townhome subdivision that Nedegaard Homes is proposing to split off from the St. Timothy's Lutheran Church property. Case History: In 1998, St. Tim's Church approached the City and was working with Nedegaard Construction Group to build a senior housing facility, but the project never evolved. The property was rezoned in 1998 to R-3 multi-family residential in anticipation of senior housing, and the Comprehensive Plan was also amended to allow for a high density residential use, but the project idea failed. The proposed townhome concept had been looked at for the last few years, but never materialized until the church recently decided to sell the property to Bruce Nedegaard for townhome development. Case: 2002-0705-06 Page: 2 ANALYSIS Surrounding Property: The surrounding property on the east is zoned GB, General Business District and is used commercially. The property to the north is zoned GB, General Business. The property to the north is used by the Medtronic Corporation. The property to the south is a combination of single and two-family residential. The area to the west of the subject property, Sullivan Lake Park is zoned R-3 and is surrounded by residential on the south and west sides. Technical Review: Plat Layout: Block 1, Lots 1-5; Block 2, Lots 1-7; Block 3, Lots 1-6; and Block 4, Lots 1-7. The plat will be approximately 2.4 acres in size and will contain 25 market rate townhome units. The plat lays out four distinct building sites; with Block 1 on the north side containing 5 units; Block 2 on the east side containing 7 units; Block 3 on the south side containing 6 units; and Block 4 on the west side facing the park containing 7 units. Each lot will be platted individually according to the building footprint, will share zero lot lines, and will also share open space and common areas, including a pathway around the development through a Home Owner's Association. Outlot A - Utility easement over the interior access road. A number of new drainage and utility easements are being proposed as indicated in the plat shown. The City Engineer is reviewing these easements to ensure the utilities serve the development sufficiently. It should be noted that Anoka County surveyors and engineers will review the Final Plat before it is filed to ensure that it meets County requirements. Mn.DOT is not required to review and give their approval of this subdivision as the development is not directly adjacent to Central Avenue (Trunk Highway 65). Public Works Director Kevin Hansen is also reviewing the watermain, and storm and sanitary sewer locations and designs to ensure that the existing systems are able to handle the projected flow increases (see comments attached). Public Works is also reviewing a hydrology study that was submitted by the site design engineer. The proposed development will utilize existing access from 51 st Avenue as shown on the site plan. This entrance to the development is indicated to be between 24 and 25 feet wide, which according to the City Engineer, should be sufficient for the traffic in this development. The City requires a minimum of a 20 foot fire lane for sufficient access. The proposed circulation system indicated should be sufficient to accommodate the number of units proposed. It should also be noted that Nedegaard is also proposing an additional access on the northwest side of the project, for emergency purposes. This emergency access would be required and would probably consist of a knock-down gate of some sort. Nedegaard would actually like for the City to allow access to the development from the entrance portion of park property parallel with the westerly lot line, but the project can fimction without it, and is not dependent on this issue. Case: 2002-0705-06 Page: 3 Site Plan The proposed site plan/plat indicates that all the setback requirements have been met within the development, including side yard setbacks of 20 feet; and front and rear yard setbacks of 30 feet. However, the ordinance allows for encroachments of up to 3 feet for decorative or ornamental features that complement the development. It should be noted that the creation of this plat and newly created lot line between the subdivision and St. Tim's Church, will result in making a small section of the west side of the church non-conforming as it relates to the required side yard setback. A lot split that was proposed and adopted by the City Council in 1998, but never recorded, allowed for the exact same split. The proposed side yard setback from the church to the property line is approximately 20 feet. However, the required setback from the church to the property line is 25 feet. Each unit is being proposed with at-grade patios that will be complemented with a pedestal type design feature to meet setback requirements, and to articulate an architectural design element. The design of the front facades will also be consistent with ordinance requirements that a minimum of 20% of the fagade facing fight of way be windows or doors. The exterior design features incorporate brick, shakes, siding, pedestal style posts, dormers, and second floor porches. It should be noted that the elevations will be staggered in the middle of the Block 4 units, and the Block 2 units. An elevation drop of approximately 3 feet from south to north will allow for the units to be staggered and should enhance visual interest of the buildings facing the church and the park. Technical review: · The 25 owner-occupied units proposed are two-bedroom, two-bath, two-car garage, and will be furnished. Brochures are not available as of yet. · Minimum floor area requirements are 750 square feet for townhomes - Each unit exceeds this requirement. · Minimum garage size requirement is 20 X 20 - Each townhome unit has a two-car garage measuring 20 X 21 in size, and room for a minimum of 2 cars in the driveway. Visitor parking is not required by ordinance, but the developer has eliminated unit # 6 in Block 1 on the NE comer of the site that will provide for 4 visitor parking spaces. Two other visitor spaces are being proposed curbside in front of the Block 2 unis. · Maximum lot coverage for the site is 35% or 37,051 square feet of building coverage - This development has a total building lot coverage of 30% or 31,758 square feet. · The total % ofgreenspace for the development is 33,372 square feet, or 32% of total lot area. (See Landscaping plan provided for details on greenspace and planting placement). · 20% of building fagades facing a public street, or parking lot shall be windows or doors for residential multi-family residential. The building fagade facing 51st street (see elevation renderings) has been designed so that the appearance is more reminiscent of a one-story rambler style with a lower roof-line and dormers. This development proposes a variety of architectural features and building materials that provide visual interest, and meet the intent of the ordinance building design standards. · A landscaping plan is required for multi-family development - The ordinance requires a Case: 2002-0705-06 Page: 4 minimum of one tree be planted for every 50 feet of street fi'ontage, and a minimum of 4 trees for every one acre of lot area. All other required setback areas shall be landscaped with grass, trees, shrubs, vines, perennial flowers - A professional landscaping design plan has been submitted (see attached) and proposes well in excess of the minimum required # of trees, as well as consistent shrubbery, sodding, and assorted complementary coniferous, ornamental, and deciduous trees. · Park dedication fees were addressed with the new Zoning and Development Ordinance. However, the language adopted did not establish a specific per unit standard. The language refers to a 10% parkland contribution or the cash equivalent of 10% of the estimate of improvements. City Council can make the determination as to what they feel is an appropriate amount - Staff has researched a # of fn'st and second ring suburbs and found that the park dedication fees ranged from between $500 - $1,000/unit. The appropriate Subdivision section may need to be amended in the near furore to reflect the City Council's desires for consistency with other communities. It should be noted that the current Sullivan Park facilities are sparse as it relates to playground equipment. Staff would recommend a fee of $750.00 per unit be used for park improvements. · Trail connection - Staff visited the site and has spoken with Bruce Nedegaard about a trail connection from this development to the Medtronic pathway on the north side of the property. Bruce has indicated that he is willing to put this connection in if Medtronic is willing to allow for it. In this scenario, Medtronic would need to be contacted and agree to allow for an easement to tap into the existing pathway. It should be noted that the City does currently have utility access to a portion of land adjacent to the trail that could be utilized for a possible path connection. Staff would strongly recommend this be accomplished if possible, and would allow for actual trail connections between the development and Sullivan Lake, as well as a trail connection between the development and Medtronic. Miscellaneous The Fire Department has reviewed the plat and has a few minor concerns (see memo attached). The elimination of unit #6; Block 1 will allow for the Fire Department to service the development sufficiently should a fire happen. Summary: The positive aspects of this proposal are as follows: · This development is the type of upgrade market-rate housing that is needed in order for economic growth to occur. · This is an in-fill site adjacent to an existing park and lake, and represents a quality development that requires no subsidy and adds to the overall tax base. The negative aspects of this proposal are as follows: · NONE, ASSUMING ALL THE CONDITIONS ARE MET. Case: 2002-0705-06 Page: 5 CONCLUSION Stq~ Recommendations : Staff recommends approval of the Site Plan and the Preliminary and Final Plat for Parkside Village(attached), as the proposed plat is consistent with the City Subdivision Ordinance and is consistent with the City Comprehensive Plan. Recommended Motions: Move to recommend City Council approval of the Preliminary and Final Plat for Parkside Village as the proposal is consistent with the City Subdivision Ordinance, and is consistent with the City Comprehensive Plan. Move to recommend City Council approval of the Preliminary and Final Plat for Parkside Village and all that identified on the plat submitted at 825 51st Avenue NE, subject to the following conditions. City Engineer review and approval of Final Plat, and any changes deemed necessary. City Council review and approval of park dedication fees. Fire Department review and approval of access and watermain issues and any changes deemed necessary. Development Agreement defining requirements and responsibilities of City and Developer. Developer required to make a connection on the north side of the development to the Medtronic walking pathway that connects to the Sullivan Lake pathway. Attachments: Completed application form; Site Plan, Prelim and Final Plat; Grading and Utilities Plan; Landscaping Plan; Elevation sketches; Floor Plans; Fire Dept Comments; Public Works comments; Public Notices; I I I I I L~ ~e~/ N 8~43'00" w 224.01 ~ I ...... ?-'-" - -- - ~ I ~ .... ,..~.._ ~ ~, I 30 FT. STREET ~ U~LI~ RAIMENT N R9'44'~5" W 224.00 I )l E I_S_T AVF.~U_~ N.F~ /I FR[]M : HUMPt~REY ~NG ' PHOH~ HO. -' Jul. 1~ 2002 O~:12AM P~ July 19, 2002 Tito Johann, City Planner City of Colutobia Heights Dear Mr. Johnson; On July 17, 2002, Humphrey Engineering, Inc. received comments from the City Public Works Director/City Engitger, Kevin Hm~son pertaining to review of Parkland Village. After review of these comments, the following changes have been compiled; Plat · Side easements are acceptable. · Ensements have been provided to extend over hydrants. · The Drainage Easements for the pending area on the church property were minimized to include only the effective pending nrea. The easement has not yet been acquired, but we see no difficulty in receiving them. G__ra,din2/EFosion Control · A NPDES permit will be applied for and received prior to any earlhwork. · Erosion control measures are in accordance with the Mirmcsota Urban Small Sites BMP Manual, published by the Metropolitan Core,cji, dated 2001. - Due to the loss of one unit and addition of visitor parking, the pond was enlarged and a bench was added at the normal water elevation of 175.3. Therefore, a permanent fence should not be required. Utilities · Sanitary sewer and waterrnain shall be public: all storm sewer and roads shall bc private. · The sanitary sewer would have toinimal cover if the layout was arranged to service more units to the $1st Ave. sewer system. - Due to the enlarged pond, the 2-year storm event is now accounted for and the 10-year has only a m.h~flal increase of 0.4 cfs. The 100-year storm is still being controlled. The drainage calculations have been revir~-d to illustrate thc changes. · The drainage area of the w~tcrly buildings is only 0.2 acres, it n'my be difficult to redirect this to c,a~luueut ar~a 15 but all efforts will be made to accomplish this. - The permanent dead pool pond surface now exceeds the 1100 ft2 requirement. (1685 ft ~ 175.0) · Due to thc ~larg~! pond, the 100-year flood elevation is 174.$9, which is below the existing b~rm to the northwest. The emergency overflow will flow to the northwest. No additional offsit¢ grading is being proposed at this time. 145 Main Street, RO. Box 252 · WoodvJlle, WI 54028 · engioee~C-b~lciwin-&elecom.net · 715.698-3440 Ii Fax: 715-698-3441 FROI'I : i~ ENCi F~E IqO. : Jul. 19 201~12 1~: I~I:IM P3 · The grading plan splits the flow between two inlets as opposed to the original grading plan which modeled the two inlets together. The drainage calculatiom will not be affec'~ed by this change due to short detention and travel times. General · A Dcvclo~ent Agreement shah be prepared with Nedegard Homes to the city's requircnmzts, · One unit was removed and an additional tour visitor parking stalls were placed in the northeast comer. · The access from the city park street has been presented, but was not preferred by others. Please contact us if you have any questions or additional comments. Sincerely, Humphrey Engineering Inc~ Roger Humphrey, PE, RLS, AICP Presiden! FF~I'I : FII.,II'qI:~Y ENG PHONE NO. : ~ul. 19 2~2 I~:131:lVI P4 PAR IDE VILLAGE Multifamily Subdivision CITY OF COLUMBIA HEIGHTS, MINNESOTA JULY 18, 2002 145 Main Stzeet, P.O. 8ox 252 I Woodville, WI 54028 II engineer~baldwin-telecom.net · 715.698-5440 · Fax: 715.698-~441 FROM : HUMPhReY ~NG PHON~ NO. : Jul. 1S 20~2 ~: 14AM PS INTRODUCTION Parkside Village is a proposed 25 unit multifamily subdivision locsted in the City of' Columbia Heights, Minnesota. This proposed subdivision provides a distinct opportunity for quality homes on a unique property. Because of the proximity of the site to ~ adjacent church, this property is "ideal" for an aesthically pleasing townhome development. PROJECT DET~H,S A~NP EXISTING CONDITIONS LEGAL DESCRIPTION Thc prol~rty is located on Lots 7 and 8 Auditor's Subdivision, No. $1, except the North 3.6 acres thereof, according to the recorded plat thereof, and situated in Anoka County, Minnesota. (See Attached Boundary Survey) SITE CHARACTERISTICS The property slopes downward to the north with some sporadic trees located throughout the project. The property is bordcrcd by $!`~ Avenue to the south, the existing parkland to the west, St. Timothy Lutheran Church to the east, and Medtronics to the SITE CALCULATIONS The entire site consists of 105,862 square feet or 2.43 acres. The site is entirely contained within R3 Zoning (Limited Multiple Family P,.e$idential District). The minimum site coverage allowed by the City of Cohm~bia Heights is 2,000 square feet. The site coverage proposed within this development is 4234 square feet, which is twice the minimum standard required by the City. The site contains 36276 sq. ft. or 34% ofgrecnspace. SUBDIVISION DESIGN FEATURES A. SETBACKS Parkaidc Village will contain minimum setbacks of 30 feet, front yard (with a 3' architect encroachment per City Ordinance); 20 feet, sidc yard; and 30 feet, rear B. HOME OWNERS ASSOCIATION Each lot owner will bca member of the Home Owners' Association (HOA), which will have deed restrictions and covenants addressing the management and care of all open space, common areas, and improvements. C. ROADWAYS The property will be accessed from 51~ Avenue NE, with an emergency entrance and exit from the adjacent parklm~d to the west. The streets within this subdivision are proposed to include blacktop, crushed aggregate base, and a granular subbase liPc, as detailed in the attached plans. D. UTILITIES Watermaia Public sewer and water is proposed within this subdivision. A six (6) inch watermam is proposed to tie into an ex/sting ten (10) inch main in 51~t Avenue. A possible watermain loop is proposed by tying into a four (4) inch rrmio on city park property near the ~orthwest comer of this site. Sanitary Sewer Ten (10) units are proposed to tie into existing main of 51*~ Avenue. Sixteen (15) units are proposed to tie into the ex/sting lift station located on the park property near the northwest comer of this site. These sixteen (15) units, at 300 glad per unit, constitute a total approximate average flow of 4500 gpd. Storm Sewer The entire site drains toward the northwest into an existing eighteen (18) inch equivalent RCP arch pipe. This pipe immediately flows into a 48 inch RCP storm sewer pipe along the north edge of the property discharging into Sullivan Lake. The project site design reduces the peak design flow for a 100-year storm event, below predevelopment conditions. A wet detention basin is also proposed. This wet pond meets the design requirements for the National Pollutant Discharge Elimination System (NPDES). Thc storm water leaves this pond through a baffled weir, which retains oils and sediment. Thc storm water then is conveyed through a grassy swale before ultimately reaching the offsite storm sewer. A hydrology study was submitted with the initial submittal. F~OM : HUMP[~Y ~NG PHON~ ~0. : Jul. 19 200~ [~9: 1SAM ~? PROJECT DESCRIFI'ION L Name of Proposed Subdivision PARKSIDE VILLAGE 2. Legal Description of Property Thc property is located on Lots 7 and 8 Auditor's Subdivision, No. 51, except the North 3.6 acres thereof, according to the recorded plat thereof, and situated in Anoka County, Minnesota.. 3. Project Size Approximately 2.43 acres 4. Developer Nedegaard Custom Homes 4200 Central Avenue NE Minneapolis, MN 55421 5. Design Development Team Civil Engineer & Site Designer: Humphrey Engineering, Inc. 145 Main Street, P.O. Box 252 Woodville, WI 54016 (715) 698-3440 Surveyor: Carley-To~ger~on, Inc. Land Surveyors Suite 703 70 West County Road "C" Little Cannda MN 55117 (612) 484-3301 Architect: Elness Swenson Graham Architects, Inc. 700 Third Street South Minneapolis, MN 55415 (612) 339-5508 CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at: www. ci. columbia-height$.mn, ua PLANNING AND ZONING COMMISSION NOTICE OF PUBLIC HEARING Members Tom Ramsdell, Chair Tammera Ericson Ted Yehle Donna Kay Schmitt Stephen Johnson Notice is hereby given that the Planning and Zoning Commission Mil conduct a public hearing in the City Council Chambers of City Hall, 590 40"' Avenue NE, at 7:00 PM on Tuesday, July 9, 2002. The order of business is as follows: A request for Site Plan Review, and request for Preliminary and Final Plat of a portion of St. 'l'imothy's Lutheran Church propertyat 825 51st Avenue NE adjacent to Sullivan Lake. The approximately 2.4 acre property is proposed to be platted and developed as a 26 unit market rate to,n-home project. For questions you may contact Tim Johnson, City Planner, at 763-706-3673. Planning and Zoning Commission CITY OF COLUMBIA HEIGHTS Walt Fehst City Manager sh The City of Columbia Heights does not discriminate on the basis ofdisability in the admission or access to, or _treatment or employ-nent in, its services, programs, or activities. Upon request, accommodation will be provided to allow individuals with disabilities to participate in all Cityof Columbia Heights' services, programs and activities. Auxiliary aids for handicapped persons are available upon request when the request is made at least 96 hours in advance. Please call the City Council Secretary at 706-3611 to make arrangements. ('1DD/706-3692 for deaf or hearing impaired only.) THE CItY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION O~ SERVICES EQUAL OPPORTUNITY EMPLOYER To: From: Date: Subject: Tim Johnson, City Planner John Crelly, Assistant Fire Chief July 18, 2002 St. Timothy Heights proposed 25-trait multifamily subdivision The Columbia Heights Fire Department has reviewed the revised plans for the proposed St. Timothy Heights project and finds the project to acceptable as proposed. Comments that have previously been discussed and agreed upon are still part of the Fire Departments approval. This would include an acceptable barrier between the subdivision and the City Park, parking restrictions if the width of the road is less than 29 feet, and relocating the fire hydrant by the visitor parking area. To: Tim Johnson, City Planner From: John Crelly, Assistant Fire Chief Date: July 2, 2002 Subject: Fire Department comments for the St. Timothy Heights project The Columbia Heights Fire Department has the following comments pertaining to the proposed St. Timothy Heights multifamily subdivision proposed on 51 Street N.E.. Please note at the time of this review it is unknown if these 26 units will be provided with a fire sprinkler system. 1) The water main shall be looped. The proposed connection to the four (4) inch main on city park property needs to be accomplished. 2) Provide "No Parking Fire Lane" signs throughout the complex on both sides of the road. Fire Apparatus access roads shall have an unobstructed width of not less than 20 feet as prescribed by Uniform Fire Code Section 902.2.2.1. 3) Provide access to within 150 feet of all portions of building 1 on the north end of the site. The current configuration does not have adequate access as prescribed by the Uniform Fire Code Section 902.2.1. "Fire apparatus access roads shall be provided in accordance with Section 901 and 902.2 for every facility, building or portion of a building hereafter constructed or moved into or within the jurisdiction when any portion of the facility or any portion of an exterior wall of the first story of the building is located more than 150 feet from fire apparatus access as measured by an approved route around the exterior of the building or facility." 4) The fire department needs to review and approve the proposed method for barricading the road between the development and the City Park. The clear opening needs to be a minimum of 20 feet in width. FROM : HLII, IPt4~EY ENG PHONE NO. : Ju I. 1~8 2802 I~M: 28PM PI July 8, 2002 Tim Johnson City Planner Dear Mr. lohnson; On July 2, 2002, Humphrey Engineering, Inc. received comments from your office pertaining to review of Parkland Village. A tier review of your comments, the following changes have been compiled; Plat · The plal indicates l:~rimeter front, rear and side easements of 10, 10 and 5 feet, respectively. · Easements have been provided to extend over hydrants. · The Drainage Easements for the pondmg area on the church property have not yet b~¢n acquired yet but we see no difficulty in receiving them. Gradin~/Erosion Control, · A NPDES permit will be applied for and received prior to any car~h work. · Erosion control measures are in accordance with the Minnesota Urban Small Sites BMP Manual, published by thc Metropolitan Council, ds~ed 2001. · Heavy-duty silt fence (wire backed) shall be provided along the west and north property lines. · Temporary erosion comrol measures shall be placed arid inspected by the engineering department prior to all grading a~tivities. · A vehicle-tracking pad shall be provided at the main entrance offofSl~ Avenue for the construction period (see attached). · Cover material for soil erosion control shall be in accordance with table (attached) based upon final slopes and use. All areas outside of the building zone(s) shall be seeded and mulched within 2 weeks of establishing final grade. · A note stating additional measures of erosion control .such as the cleaning of public streets, as necessary, throughout site and building construction lms been included. · We would like to discuss the requirement of a fence mound the pond. The depth at the normal water lcvcl is only 2.3 FT. · The GFE of the north building units is shown. FROM : HUMPHREY ENG PHONE NO. : Sul. ~ 2002 04: 29PM P2 · All utiliti~ shall meet thc City of Columbia tteights 2002 Specifications. · A note has been added stating that all public facilities shall be inspired by the City of Columbia Heights. The City shall inspect all core, eot-to Public facilities, The Contractor shall call Public Works ~,, (763) 706-3'/00, 24 lxours in advauce for public inspection. · All water rmfin is shown as g inches, with the exception of Hydrant Leads, they am 6 inches. · All sanitary sewer pipes shall be insulated with less than 6 feet of cover. · The Developers Agreement should address the sanitary sewer and water main as being public and all storm sewer and roads being private. · The water main on the northerly most roadway has been changed to show a valve and stub to the east property to allow tbr fiRure connection. · Along the egst property line, hydrants have been moved west to minimize interference with snow plowing activities and scrviccs have been adjusted accordingly. · Hydrants arc called out as Waterous Pacer WB-6?. · A note has been added calling out external chinmey seals on all sanitary sewer manholes as required by City specifications. · A note has been addezl stating, the last three pipe joints and the FE$ shall be tied. General · A Development Agreement shall be prepared with Nedegard Hom~. · A note hm been added stating thc knockdown gate shall meet Gity approval prior to installation. At this time we do not have a specific type picked out. · Thc radius's at the 90-degree turn have been marked and sent to the Fire Chief, we are awaiting comments on this issue. · The Develope~ shall provide the City of Columbia Heights with Record Drawings of all newly constructed utilities, including storm sewer. · Any retaining walls in excess of 4 feel shall meet the City engineer's requirements. Sir~erely, Humphrey Engineering Inc. C~ogory D. Mori$, P.E. Project Manager CITY OF COLUMBIA HEIGHTS Public Works Department TO: TIM JOHNSON CITY PLANNER FROM: SUBJECT: KEVIN HANSEN PUBLIC WORKS DIRECTOR/CITY ENGINEE ST. TIMOTHY HEIGHTS (preliminary review) DATE: July 2, 2002 I have reviewed the subject development submittal packet dated June 13th, 2002 and plans June 26th, 2002 and have the following requirements/comments: Plat · The plat should indicate perimeter from, rear and side easements of 10, 10 and 5 feet, respectively. · Easements should be provided extending over hydrants. · Please provide the City of Columbia Heights with a copy of the drainage easement from St Timothy's Church for the ponding area. Grading/Erosion Control · An NPDES permit will be required (1-5 acres). · Erosion control measures shall be in accordance with the Minnesota Urban Small Sites BMP Manual, published by the Metropolitan Council, dated 2001. · Provide heavy-duty silt fence (wire backed) along the west and north property lines. · Temporary erosion control shall be placed and inspected by the engineering department prior to any grading activities. · Provide a vehicle-tracking pad at the main entrance off of 51 st Avenue during construction (see attached). · Cover material for soil erosion control shall be in accordance with table one (attached) based upon final slopes and use. All areas outside of the building zone(s) shall be seeded and mulched within 14 days of establishing final grade. · An additional measure of erosion control will be cleaning the public streets, as necessary, throughout site and building construction. · Because the pond slopes exceed 4:1 and benching is not provided, a protective fence shall be required around the pond. · What is the GFE of the north building units? Utilities · All utilities shall meet the City of Columbia Heights 2002 Specifications; a copy is available from the engineering department in a hard copy or electronic format. · All public facilities shall be inspected by the City of Columbia Heights. The City shall also inspect all connect-to Public facilities. The Contractor may call Public Works ~ (763) 706- 3700, 24 hours in advance for public inspections. · The City minimum size for water main is 8 inches. St. Timothy Heights - Preliminary Plan Review Tim Johnson Page 2 · Insulate all sanitary sewer pipes with less than 6 feet of cover from the top of pipe to finish grade. · Sanitary sewer and water main shall be public; all storm sewer and roads shall be private. · The water main on the northerly most roadway shall be valved and stubbed to the east property to allow for future connection. · Along the east property line, move the hydrants west to minimize interference with snow plowing activities. The water service should also be located to the west of the service tap to allow for flushing activities. · Hydrants shall be Waterous Pacer WB-67. · Place external chimney seals on all sanitary sewer manholes in accordance with City specifications. · At the FES, tie the last three pipe joints leading to the FES. · Review of the storm sewer is incomplete at this time. · Review of the sanitary discharge into the Sullivan Lake Lift Station is incomplete at this time. General · A Development Agreement should be prepared with Nedegaard Homes which would be recorded against the property and spell out several things such as ownership and maintenance of the infrastructure, recovery of City inspection costs, developer warranties, developer permits, and City acceptance. · The ninety-degree tums at the main entrance needs to meet the turning radius' for City emergency vehicle access. Please verify with the fire department. · Please provide the City with a detail of how the emergency access (knockdowns) will be provided at the park drive connection. · The Development shall provide the City of Columbia Heights with as-built drawings of all newly constructed utilities, including storm sewer. · Any retaining walls in excess of 4 feet shall be designed with detail drawings prepared and signed by a licensed professional engineer. The design computations and plans shall be certified by the engineer and submitted to the City for permanent record. If modular block retaining walls are used, they shall be constructed in accordance with the manufacturer's recommendations upon approval of the design methodology by the engineer. If you have any questions or need further information, please contact me at (763) 706-3705. Cc: Lauren McClanahan, Public Works Superintendent Kathy Young, Assistant City Engineer G: \Users~Public Works\plan reviews~2002\St. Timothy Heights_prelim.doc Customer Name Aclclma~ city Phone 4200 Cell~l Ave NE MN ~_S3-?$?-2926 CITY OF COLUMBIA HEIGHTS Public Works Department TO: TIM JOHNSON CITY PLANNER FROM: SUBJECT: KEVIN HANSEN PUBLIC WORKS DIRECTOR/CITY ENGINEE PARKSIDE VILLAGE (supplemental review) DATE: July 19, 2002 I have reviewed the subject development submittal packet dated June 13th, 2002, revised plans dated July 2nd, 2002 and revised plat dated July 2nd, 2002 and have the following requirements/comments: Plat · The plat now indicates perimeter front, rear and side easements which are acceptable. · Easements have been provided extending over hydrants. · Please provide the City of Columbia Heights with a copy of the drainage easement from St Timothy's Church for the off-site ponding area. Grading/Erosion Control · An NPDES permit will be required (1-5 acres). · Erosion control measures shall be in accordance with the Minnesota Urban Small Sites BMP Manual, published by the Metropolitan Council, dated 2001. · Because the pond slopes exceed 4:1 and benching is not provided, a permanent, protective fence shall be required around the pond. Utilities Sanitary sewer and water main shall be public; all storm sewer and roads shall be private. Sanitary Sewer - Discharge into Sullivan Lake Lift Station: a. Is it possible to discharge any more of the units to the gravity system on 51 st Avenue? Storm Sewer: a. The City's Storm Water Management Ordinance requires limiting post development nmoffto pre-development rates for the 2, 10 and 100 year storm events. The hydrologic information provided only meets this criteria for the 100 year event. What other measures can be made to attain the 2 & 10 year post-pre runoff rates? b. All rooftop drainage shall be directed to catchment area 1S for the westerly buildings (consider building gutters) c. The permanent pond surface (dead pool) area of the sediment pond (2P) should be a minimum of 1,100 ft2. (2% of impervious area draining to pond, or 1.20 acres). It appears that this may be attained at the 175.45 elevation in the pond area. d. For Pond 3P, will berming be provided to the 100-year flood elevation (it is unclear on the 11 x 17 grading plan)? How will overflow of this pond be directed? Will additional grading offsite be required? e. The grading plan submitted with the hydrologic calc's differs from the 7/2/02 grading plan around pond 1P and the north (e-w) street, on the west side. Please clarify. St. Timothy Heights - supplemental review Tim Johnson Page 2 General · A Development Agreement with Nedegaard Homes should be approved by the City Council. A proposed copy is attached herewith. This should be recorded against the property will spell out several things such as ownership and maintenance of the infrastructure, recovery of City inspection costs, developer warranties, developer permits, and City acceptance. · Are any provisions being made for additional visitor parking or additional overflow parking? · I do not support the main access option of combining the development access with the park access due to potential vehicular conflicts and parking issues. If you have any questions or need further information, please contact me at (763) 706- 3705. Attachment: Development Contract (draft) Cc: Lauren McClanahan, Public Works Superintendent Kathy Young, Assistant City Engineer G: \UsersXPublic Works\plan reviewsX2002XSt. Timothy Heights~relim.doc DEVELOPMENT CONTRACT FOR PLAT OF PARKSIDE VILLAGE TOWNHOMES ANOKA COUNTY, MINNESOTA INDEX TO CITY OF COLUMBIA HEIGHTS DEVELOPMENT CONTRACT FOR PARKSIDE VILLAGE TOWNHOMES, ANOKA COUNTY, MINNESOTA RECITALS ARTICLE 1 - DEFINITIONS 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 Terms City of Columbia Heights Developer, Owner Plat Development Plans Development Contract Council PWD Director of PWD County Developer Improvements Developer Public Improvements Developer Default Force Majeure Developer Warranties A. Authority B. No Default Co D. E. F. G. H. Present Compliance With Laws Continuing Compliance With Laws No Litigation Full Disclosure Two Year Warranty On Proper Work and Materials Obtaining Permits 1.16 City Warranties A. Authority 1.17 Formal Notice ARTICLE 2 - DEVELOPER IMPROVEMENTS 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Developer Improvements Boulevard and Area Restoration Street Maintenance Occupancy Approval of Contractors and Engineer Construction Inspection Faithful Performance of Construction Contracts City Acceptance ARTICLE 3 - RESPONSIBILITY FOR COSTS 3.1 Developer Improvement Costs 3.2 Enforcement Costs 3.3 Time of Payment ARTICLE 4 - DEVELOPER WARRANTIES 4.1 Statement of Developer Warranties ARTICLE 5 - CITY WARRANTIES 5.1 Statement of City Warranties ARTICLE 6 - INDEMNIFICATION OF CITY 6.1 Indemnification of City ARTICLE 7 - CITY REMEDIES UPON DEVELOPER DEFAULT 7.1 7.2 7.3 7.4 City Remedies No Additional Waiver Implied by One Waiver No Remedy Exclusive Emergency ARTICLE 8 - ESCROW DEPOSIT 8.1 Escrow Requirement 8.2 Escrow Release and Escrow Increase; Developer Improvements ARTICLE 9 - MISCELLANEOUS 9.1 City's Duties 9.2 No Third Party Recourse 9.3 Validity 9.4 Recording 9.5 Binding Agreement 9.6 Contract Assignment 9.7 Amendment and Waiver 9.8 Governing Law 9.9 Counterparts 9.10 Headings 9.11 Inconsistency 9.12 Access 9.13 Landscaping 9.14 Additional Agreements 9.15 Release of Development Contract EXHIBIT A - LIST OF DEVELOPMENT PLANS EXHIBIT B - DEVELOPER PUBLIC IMPROVEMENTS EXHIBIT C - ESCROW CALCULATION 5 CITY OF COLUMBIA HEIGHTS DEVELOPMENT CONTRACT FOR PARKSIDE VILLAGE TOWNHOMES THIS AGREEMENT, made and entered into on the day of ,2002, by and between the CITY OF COLUMBIA HEIGHTS, a municipality of the State of Minnesota, (hereinafter called the CITY), and the OWNER and DEVELOPER identified herein. RECITALS: WHEREAS, the DEVELOPER is requesting preliminary and final approval of the PLAT; WHEREAS, the DEVELOPER has applied to the CITY for approval of the preliminary and final plat and the DEVELOPMENT PLANS, and the same have been approved by the CITY, WHEREAS, in conjunction with the granting of final plat approval and other approvals, the CITY requires the installation of a bituminous pathway, landscaping and street lighting. WHEREAS, under authority granted to it, including Minnesota Statutes Chapters 412, 429 and 462, the COUNCIL has agreed to approve the DEVELOPMENT PLANS on the following conditions: 1. That the DEVELOPER enter into this DEVELOPMENT CONTRACT, which contract defines the work which the DEVELOPER undertakes to complete within the PLAT; AND 2. The DEVELOPER shall provide an irrevocable letter of credit, or cash deposit, in the amount and with conditions satisfactory to the CITY, providing for the actual construction and installation of such improvements within the period specified by the CITY. WHEREAS, the DEVELOPER has filed four (4) complete sets of the DEVELOPMENT PLANS with the CITY; WHEREAS, the DEVELOPMENT PLANS have been prepared by a registered professional engineer and have been submitted to and approved by the DIRECTOR OF THE PWD. NOW, THEREFORE, subject to the terms and conditions of this DEVELOPMENT CONTRACT and in reliance upon the representations, warranties and covenants of the parties herein contained, the CITY, OWNER and DEVELOPER agree as follows: 6 ARTICLE L DEFINITIONS 1.1 TERMS. The following terms, unless elsewhere defined specifically in the DEVELOPMENT CONTRACT, shall have the following meanings as set forth below. 1.2 CITY. "CITY" means the City of Columbia Heights, a Minnesota municipal corporation. 1.3 DEVELOPER~ OWNER. "DEVELOPER" means Nedegaard Custom Homes, a Minnesota Limited Partnership Company, and 'OWNER" means Nedegaard Custom Homes, a Limited Partnership Company. 1.4 PLAT. "PLAT" means the plat of PARKSIDE VILLAGE TOWNHOMES, in the City of Columbia Heights, Anoka County, Minnesota. 1.5 DEVELOPMENT PLANS. "DEVELOPMENT PLANS" means all those plans, drawings, specifications and surveys identified and checked on the attached Exhibit A, and hereby incorporated by reference and made a part of this DEVELOPMENT CONTRACT. 1.6 DEVELOPMENT CONTRACT. "DEVELOPMENT CONTRACT" means this instant contract by and among the CITY, OWNER and DEVELOPER. 1.7 COUNCIL. "COUNCIL" means the Council of the City of Columbia Heights. 1.8 Heights. PWD. "PWD" means the Public Works Department of the City of Columbia 1.9 DIRECTOR OF PWD. "DIRECTOR OF PWD" means the Director of Public Works Department of the City of Columbia Heights and his delegates. 1.10 COUNTY. "COUNTY" means Anoka County, Minnesota. 1.11 DEVELOPER IMPROVEMENTS. "DEVELOPER IMPROVEMENTS" means and includes all the improvements identified on the attached Exhibit B. 1.12 DEVELOPER PUBLIC IMPROVEMENTS. "DEVELOPER PUBLIC IMPROVEMENTS" means and includes, jointly and severally, all the improvements identified and checked on the attached Exhibit B that are further labeled "public". DEVELOPER PUBLIC IMPROVEMENTS are improvements to be constructed by the DEVELOPER within public right-of-way and which are to be approved and later accepted by the CITY. DEVELOPER PUBLIC IMPROVEMENTS are part of DEVELOPER IMPROVEMENTS. 7 1.13 DEVELOPER DEFAULT. "DEVELOPER DEFAULT" means and includes, jointly and severally, any of the following or any combination thereof: failure by the DEVELOPER to timely pay the CITY any money required to be paid under the DEVELOPMENT CONTRACT; failure by the DEVELOPER to timely construct the DEVELOPER PUBLIC IMPROVEMENTS according to the DEVELOPMENT PLANS and the CITY standards and specifications; failure by the DEVELOPER to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this DEVELOPMENT CONTRACT; d) breach of the DEVELOPER WARRANTIES. 1.14 FORCE MAJEURE. "FORCE MAJEURE" means acts of God, including, but not limited to floods, ice storms, blizzards, tornadoes, landslides, lightning and earthquakes (but not including reasonably anticipated weather conditions for the geographic area), riots, insurrections, war or civil disorder affecting the performance of work, blockades, power or other utility failures, and fires or explosions. 1.15 DEVELOPER WARRANTIES. "DEVELOPER WARRANTIES" means that the Developer hereby warrants and represents the following: AUTHORITY. Developer is a limited liability company, validly existing and in good standing under the laws of the State of Minnesota. DEVELOPER has the right, power, legal capacity and authority to enter into and perform its obligations under this DEVELOPMENT CONTRACT, and no approvals or consents of any persons are necessary in connection with the authority of DEVELOPER to enter into and perform its obligations under this DEVELOPMENT CONTRACT. Bo NO DEFAULT. DEVELOPER is not in default under any lease, contract or agreement to which it is a party or by which it is bound which would affect performance under this DEVELOPMENT CONTRACT. DEVELOPER is not a party to or bound by any mortgage, lien, lease, agreement, instrument, order, judgment or decree which would prohibit the execution or performance of this DEVELOPMENT CONTRACT by DEVELOPER or prohibit any of the transactions provided for in this DEVELOPMENT CONTRACT. Co PRESENT COMPLIANCE WITH LAWS. DEVELOPER has complied with and is not in violation of applicable federal, state or local statutes, laws, and regulations (including, without limitation, permits and licenses and any applicable zoning, environmental or other law, ordinance or regulation) affecting the PLAT and the DEVELOPMENT PLANS and the DEVELOPER IMPROVEMENTS; and DEVELOPER is not aware of any pending or threatened claim of any such violation. Do CONTINUING COMPLIANCE WITH LAWS. DEVELOPER will comply with all applicable federal, state and local statutes, laws and regulations (including, without limitation, permits and licenses and any applicable zoning, environmental or other law, ordinance or regulation) affecting the PLAT and the DEVELOPMENT PLANS and the DEVELOPER IMPROVEMENTS. Eo NO LITIGATION. There is no suit, action, arbitration or legal, administrative or other proceeding or governmental investigation pending, or threatened against or affecting DEVELOPER or the PLAT or the DEVELOPMENT PLANS or the DEVELOPER IMPROVEMENTS. DEVELOPER is not in default with respect to any order, writ, injunction or decree of any federal, state, local or foreign court, department, agency or instrumentality. FULL DISCLOSURE. None of the representatives and warranties made by DEVELOPER or made in any exhibit hereto or memorandum or writing furnished or to be fumished by DEVELOPER or on its behalf contains or will contain any untrue statement of material fact or omit any material fact the omission of which would be misleading. G. TWO YEAR WARRANTY ON PROPER WORK AND MATERIALS. The DEVELOPER warrants all work required to be performed by its under this DEVELOPMENT CONTRACT against poor material and faulty workmanship for a period of two (2) years after its completion and acceptance by the CITY, except that landscaping materials are only wan'anted for twelve (12) calendar months after completion and acceptance. The DEVELOPER shall be solely responsible for all costs of performing repair work required by the CITY within thirty (30) days of notification. Ho OBTAINING PERMITS. The DEVELOPER shall obtain in a timely manner and pay for all required permits, licenses and approvals, and shall meet, in a timely manner, all requirements of all applicable, local, state and federal laws and regulations which must be obtained or met before the DEVELOPER IMPROVEMENTS may be lawfully constructed. 1.16 CITY WARRANTIES. "CITY WARRANTIES" means that the CITY hereby warrants and represents as follows: AUTHORITY. CITY is a municipal corporation duly incorporated and validly existing in good standing the laws of the State of Minnesota. CITY has the fight, power, legal capacity and authority to enter into and perform its obligations under this DEVELOPMENT CONTRACT. 1.17 FORMAL NOTICE. "FORMAL NOTICES" means notices given by one party to the other if in writing and if and when delivered or tendered either in person or by depositing it in the United States Mail and in a sealed envelope, by certified mail, return receipt requested, with postage and postal charges prepaid, addressed as follows: If to CITY: City of Columbia Heights Attention: City Manager 590 40th Avenue N.E. Columbia Heights, Minnesota 55421 If to DEVELOPER Nedegaard Custom Homes C/o Bruce Nedegaard 4200 Central Avenue Columbia Heights, Minnesota 55421 or to such other address as the party addressed shall have previously designated by notice given in accordance with this Section. Notices shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the third day after mailing if mailed as provided above, provided, that a notice not given as above shall, if it is in writing, be deemed given if and when actually received by a party. 2.1 2.2 ARTICLE 2 DEVELOPER IMPROVEMENTS DEVELOPER IMPROVEMENTS. The DEVELOPER shall install, at its own cost, the DEVELOPER IMPROVEMENTS in accordance with the DEVELOPMENT PLANS. The DEVELOPER IMPROVEMENTS shall be completed by the dates shown on Exhibit B, except as completion dates are extended by subsequent resolution of the COUNCIL. Failure of the CITY to promptly take action to enforce this DEVELOPMENT CONTRACT after expiration of time in which the DEVELOPER IMPROVEMENTS are to be completed shall not waive or release any rights of the CITY; the CITY may take action at any time thereafter, and the terms of this contract shall be deemed to be automatically extended until such time as the DEVELOPER IMPROVEMENTS are completed to the CITY's satisfaction. BOULEVARD AND AREA RESTORATION. The DEVELOPER shall seed or lay cultured sod in all boulevards within 30 days of the completion of street related improvements and restore all other areas disturbed by the development 10 grading operation in accordance with the approved erosion control plan, over the entire PLAT. 2.3 2.4 STREET MAINTENANCE. The DEVELOPER shall clear, on a daily basis, any soil, earth or debris from the streets and wetlands within or adjacent to this PLAT resulting from the grading or building on the land within the PLAT by the DEVELOPER or its agents, and shall restore to the CITY's specifications any gravel base contaminated by mixing construction or excavation debris, or earth in it, and repair to the CITY's specifications any damage to bituminous surfacing resulting from the use of construction equipment. OCCUPANCY. No certificate of occupancy and no occupancy of any building in the PLAT shall occur until the DEVELOPER IMPROVEMENTS have been installed, except for landscaping, which may be a condition subsequent. 2.5 2.6 2.7 APPROVAL OF CONTRACTORS AND ENGINEER. Any contractor or engineer preparing plans and specifications selected by the DEVELOPER to design, construct or install any DEVELOPER PUBLIC IMPROVEMENTS must be approved in writing by the DIRECTOR OF PWD. CONSTRUCTION. The construction, installation, materials and equipment related to DEVELOPER PUBLIC IMPROVEMENTS shall be in accordance with the DEVELOPMENT PLANS. The DEVELOPER shall cause the contractors to furnish the PWD with a written schedule of proposed operations, subcontractors and material suppliers, at least five (5) days prior to commencement of construction work. The DEVELOPER shall notify the CITY in writing, coordinate and hold a pre-construction conference with all affected parties at least three (3) days prior to starting construction of any DEVELOPER PUBLIC IMPROVEMENTS. INSPECTION. The PWD or its designated representative, shall periodically inspect the work installed by the DEVELOPER, its contractors, subcontractors or agents. The DEVELOPER shall notify the PWD two (2) working days prior to the commencement of the laying of utility lines, subgrade preparation, the laying of gravel base for street construction or any other improvement work which shall be subsequently buried or covered to allow the CITY an opportunity to inspect such improvement work. Upon receipt of said notice, the City shall have a reasonable time, not to be less than three (3) working days, to inspect the improvements. Failure to notify the CITY to allow it to inspect said work shall result in the CITY'S right pursuant to Article 15 to withhold the release of any portion of the escrow amount resulting fi'om work being performed without the opportunity for adequate CITY inspection. 11 2.8 FAITHFUL PERFORMANCE OF CONSTRUCTION CONTRACTS. The 2.9 3.1 3.2 DEVELOPER shall fully and faithfully comply with all terms of any and all contracts entered into by the DEVELOPER for the installation and construction of all of the DEVELOPER PUBLIC IMPROVEMENTS; and the DEVELOPER shall obtain lien waivers. Within thirty (3) days after FORMAL NOTICE, the DEVELOPER agrees to repair or replace, as directed by the CITY and at the DEVELOPER's sole cost and expense, any work or materials that within one (1) years after acceptance of the DEVELOPER PUBLIC IMPROVEMENTS by the CITY becomes defective in the opinion of the City. CITY ACCEPTANCE. The DEVELOPER shall give FORMAL NOTICE to the CITY within thirty (30) days once DEVELOPER PUBLIC IMPROVEMENTS have been completed in accordance with this DEVELOPMENT CONTRACT and the ordinances, CITY standards and specifications and the DEVELOPMENT PLANS. The CITY shall then inspect the DEVELOPER PUBLIC IMPROVEMENTS and notify the DEVELOPER of any DEVELOPER PUBLIC IMPROVEMENTS that do not so conform. Upon compliance with this DEVELOPMENT CONTRACT and CITY ordinances, standards and specifications, and the DEVELOPMENT PLANS, the DEVELOPER PUBLIC IMPROVEMENTS shall become the property of the CITY upon FORMAL NOTICE of acceptance by the CITY. After acceptance, the DEVELOPER PUBLIC IMPROVEMENTS become the property of the CITY, and the DEVELOPER PUBLIC IMPROVEMENTS except as provided in Section 1.15. If the DEVELOPER PUBLIC IMPROVEMENTS do not conform, FORMAL NOTICE shall be given to the DEVELOPER of the need for repair or replacement. ARTICLE 3 RESPONSIBILITY FOR COSTS DEVELOPER IMPROVEMENT COSTS. The DEVELOPER shall pay for the DEVELOPER IMPROVEMENTS; that is, all costs of persons doing work or fumishing skills, tools, machinery or materials, or insurance premiums or equipment or supplies and all just claims for the same; and the CITY shall be under no obligation to pay the contractor or any subcontractor any sum whatsoever on account thereof, whether or not the CITY shall be under no obligation to pay the contractor or any subcontractor any sum whatsoever on account thereof, whether or not the CITY shall have approved the contract or subcontract. ENFORCEMENT COSTS. The DEVELOPER shall pay the CITY for costs incurred in the enforcement of this DEVELOPMENT CONTRACT, including engineering and attorneys' fees. 12 3.3 4.1 5.1 TIME OF PAYMENT. The DEVELOPER shall pay all bills from the CITY within thirty (30) days after billing. Bills not paid within thirty (30) days shall become interest at the rate of 8% per year. ARTICLE 4 DEVELOPER WARRANTIES STATEMENT OF DEVELOPER WARRANTIES. The Developer hereby makes and states the DEVELOPER WARRANTIES. ARTICLE 5 CITY WARRANTIES STATEMENT OF CITY WARRANTIES. The City hereby makes and states the CITY WARRANTIES. 6.1 ARTICLE 6 INDEMNIFICATION OF INDEMNIFICATION OF CITY. DEVELOPER shall indemnify, defend and hold the CITY its COUNCIL, agents, employees, attorneys and representatives harmless against and in respect of any and all claims, demands, actions, suits, proceedings, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including interest, penalties and attorneys' fees, that the CITY incurs or suffers, which arise out of, results from or relates to: a) breach by the DEVELOPER of the DEVELOPER WARRANTIES; b) failure of the DEVELOPER to timely construct the DEVELOPER PUBLIC IMPROVEMENTS according to the DEVELOPMENT PLANS and the CITY ordinances, standards and specifications; c) failure by the DEVELOPER to observe or perform any covenant, conditions, obligation or agreement on its part to be observed or performed under this DEVELOPMENT CONTRACT; d) failure by the DEVELOPER to pay contractors, subcontractors, laborers, or materialmen; e) failure by the DEVELOPER to pay for materials; f) approval by the CITY of the DEVELOPMENT PLANS; g) failure to obtain the necessary permits and authorizations to construct the DEVELOPER PUBLIC IMPROVEMENTS; 13 h) construction of the DEVELOPMENT PUBLIC IMPROVEMENTS. 7.1 ARTICLE 7 CITY REMEDIES UPON DEVELOPER DEFAULT CITY REMEDIES. If a DEVELOPER DEFAULT occurs, that is not caused by FORCE MAJEURE, the CITY shall give the DEVELOPER FORMAL NOTICE of the DEVELOPER DEFAULT and the DEVELOPER shall have to cure the DEVELOPER DEFAULT within a thirty (30) days cure period, hereinafter defined as "CURE PERIOD". Said CURE PERIOD may be extended by the CITY for a reasonable period of time to be determined by the DIRECTOR OF PWD, at his sole discretion, provided that the DEVELOPER submits, to the CITY using the FORMAL NOTICE procedures of Section 1.17 within the CURE PERIOD, a reasonable plan or contract bid that demonstrates that it is impractical to cure the DEVELOPER DEFAULT within the CURE PERIOD. If the DEVELOPER, after FORMAL NOTICE to it by the CITY, does not cure the DEVELOPER DEFAULT within the CURE PERIOD or DIRECTOR OF PWD approved extension thereof, then the CITY may avail itself of any remedy afforded by law and any of the following remedies. the CITY may specifically enforce this DEVELOPMENT CONTRACT; b) the CITY may suspend any work improvement or obligation to be performed by the CITY; c) the CITY may collect on the irrevocable letter of credit or cash deposit; d) the CITY may deny building and occupancy permits for buildings within the PLAT; e) the CITY may, at its sole option, perform the work or improvements to be performed by the DEVELOPER, in which case the DEVELOPER shall within thirty (30) days after written billing by the CITY reimburse the CITY for any costs and expenses incurred by the CITY. In the alternative, the CITY may in whole or in part, specially assess any of the costs and expenses incurred by the CITY; and the DEVELOPER and OWNER hereby waive any and all procedural and substantive objections to the installation and construction of the work and improvements and the special assessment resulting there from, including but not limited to notice and hearing requirement and any claim that the special assessments exceed benefit to the PLAT. The 14 DEVELOPER and OWNER hereby waive any appeal rights otherwise available pursuant to Minn. Stat. 429.081. 7.2 NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event any agreement contained in this DEVELOPMENT CONTRACT is breached by the DEVELOPER and thereafter waived in writing by the CITY, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. All waivers by the CITY must be in writing. 7.3 NO REMEDY EXCLUSIVE. No remedy herein conferred upon or reserved to the CITY shall be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the DEVELOPMENT CONTRACT or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the CITY to exercise any remedy reserved to it, it shall not be necessary to give notice, other than the FORMAL NOTICE. 7.4 EMERGENCY. Notwithstanding the requirement relating to FORMAL NOTICE to the DEVELOPER in case of a DEVELOPER DEFAULT and notwithstanding the requirement relating to giving the DEVELOPER a thirty (30) day period to cure the DEVELOPER DEFAULT, in the event of an emergency as determined by the Director of PWD, resulting from the DEVELOPER DEFAULT, the CITY may perform the work or improvement to be performed by the DEVELOPER without giving any notice or FORMAL NOTICE to the DEVELOPER and without giving the DEVELOPER the forty-eight (48) hour period to cure the DEVELOPER DEFAULT. In such case, the DEVELOPER shall within thirty (30) days after written billing by the CITY reimburse the CITY for any and all costs incurred by the CITY. In the altemative, the CITY may, in whole or in part, specially assess the costs and expenses incurred by the CITY; and the DEVELOPER and OWNER hereby waive any and all procedural and substantive objections to the installation and construction of the work and improvements and the special assessments resulting there from, including but not limited to notice and hearing requirements and any claim that the special assessments exceed benefit to the PLAT. The DEVELOPER and OWNER hereby waive any appeal rights otherwise available pursuant to Minn. Stat. 429.081. 15 8.1 8.2 ARTICLE 8 ESCROW DEPOSIT ESCROW REQUIREMENT. Contemporaneously herewith, the DEVELOPER shall deposit with the CITY an irrevocable letter of credit, or cash deposit for the amounts set forth on Exhibit C. All cost estimates shall be acceptable to the DIRECTOR OF PWD. The total escrow amount was calculated as shown on the attached Exhibit C. The bank and form of the irrevocable letter of credit, or cash deposit shall be subject to approval by the City Finance Director and City Attorney and shall continue to be in full force and effect until released by the CITY. The irrevocable letter of credit shall be for a term ending December 31, 2003. In the alternative, the letter of credit may be for a one year term provided it is automatically renewable for successive one year periods from the present or any future expiration dates with a final expiration date of December 31, 2003, and further provided that the irrevocable letter of credit states that at least sixty (60) days prior to the expiration date the bank will notify the City that if the bank elects not to renew for an additional period. The irrevocable letter of credit shall secure compliance by the DEVELOPER with the terms of this DEVELOPMENT CONTRACT. The CITY may draw down on the irrevocable letter of credit or cash deposit, without any further notice than that provided in Section 7.1 relating to a DEVELOPER DEFAULT, for any of the following reasons: a) a DEVELOPER DEFAULT; or b) upon the CITY receiving notice that the irrevocable letter of credit will be allowed to lapse before December 31, 2003. With CITY approval, the irrevocable letter of credit or cash deposit may be reduced pursuant to Section 8.2 fi.om time to time as financial obligations are paid. ESCROW RELEASE AND ESCROW INCREASE~ DEVEI,OPER IMPROVEMENTS. Periodically, upon the DEVELOPER's written request and upon completion by the DEVELOPER and acceptance by the CITY of any specific DEVELOPER PUBLIC IMPROVEMENTS, ninety percent (90%) of that portion of the irrevocable letter of credit, or cash deposit covering those specific completed improvements only shall be released. The final ten percent (10%) of that portion of the irrevocable letter of credit, or cash deposit, for those specific completed improvements shall be held until acceptance by the CITY and expiration of the one year warranty period under Section 1.15 hereof; in the alternative, the DEVELOPER may post a bond satisfactory to the CITY with respect to the final ten percent (10%). 16 9.1 9.2 9.3 9.4 9.5 9.6 9.7 If it is determined by the CITY that the DEVELOPMENT PLANS were not strictly adhered to, or that work was done without CITY inspection, the CITY may require, as a condition of acceptance, that the DEVELOPER post a irrevocable letter of credit, or cash deposit equal to 125% of the estimated amount necessary to correct the deficiency or to protect against deficiencies arising there from. Said additional irrevocable letter of credit, or cash deposit, shall remain in force for such time as the CITY deems necessary, not to exceed two (2) years. In the event that work, which is concealed, was done without permitting CITY inspection, then the CITY may, in the altemative, require the concealed condition to be exposed for inspection purposes. ARTICLE 9 MISCELLANEOUS CITY's DUTIES. The terms of this DEVELOPMENT CONTRACT shall not be considered an affirmative duty upon the CITY to complete any DEVELOPMENT IMPROVEMENTS. NO THIRD PARTY RECOURSE. Third parties shall have no recourse against the CITY under this DEVELOPMENT CONTRACT. VALIDITY. If any portion, section, subsection, sentence, clause, paragraph or phrase of this DEVELOPMENT CONTRACT is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion of this DEVELOPMENT CONTRACT. RECORDING. The DEVELOPMENT CONTRACT and PLAT shall be recorded with the COUNTY Recorder and the DEVELOPER shall provide and execute any and all documents necessary to implement the recording. BINDING AGREEMENT. The parties mutually recognize and agree that all terms and conditions of this recordable DEVELOPMENT CONTRACT shall mn with the PLAT and shall be binding upon the heirs, successors, administrators and assigns of the DEVELOPER. CONTRACT ASSIGNMENT. The DEVELOPER may not assign this DEVELOPMENT CONTRACT without the written permission of the COUNCIL. The DEVELOPER's obligations hereunder shall continue in full force and effect, even if the DEVELOPER sells one or more lots, the entire PLAT, or any part of it. AMENDMENT AND WAIVER. The parties hereto may by mutual written agreement amend this DEVELOPMENT CONTRACT in any respect. Any party hereto may extend the time for the performance of any of the obligations of another, waive any inaccuracies in representations by another contained in this DEVELOPMENT CONTRACT or in any document delivered pursuant hereto 17 9.8 9.9 9.10 9.11 9.12 9.13 which inaccuracies would otherwise constitute a breach of this DEVELOPMENT CONTRACT, waive compliance by another with any of the covenants contained in this DEVELOPMENT CONTRACT and performance of any obligations by the other or waive the fulfillment of any condition that is precedent to the performance by the party so waiving of any of its obligations under this DEVELOPMENT CONTRACT. Any agreement on the part of any party for any such amendment, extension or waiver must be in writing. No waiver of any of the provisions of this DEVELOPMENT CONTRACT shall be deemed, or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. GOVERNING LAW. This DEVELOPMENT CONTRACT shall be governed by and construed in accordance with the laws of the State of Minnesota. COUNTERPARTS. This DEVELOPMENT CONTRACT may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. HEADINGS. The subject headings of the paragraphs and subparagraphs of this DEVELOPMENT CONTRACT are included for purposes of convenience only, and shall not affect the construction of interpretation of any of its provisions. INCONSISTENCY. If the DEVELOPMENT PLANS are inconsistent with the words of this DEVELOPMENT CONTRACT or if the obligations imposed hereunder upon the DEVELOPER are inconsistent, then that provision or term which imposes a greater and more demanding obligation on the DEVELOPER shall prevail. ACCESS. The DEVELOPER hereby grants to the CITY, its agents, employees, officers, and contractors a license to enter the PLAT to perform all inspections deemed appropriate by the CITY during the installation of DEVELOPER IMPROVEMENTS by the DEVELOPER. LANDSCAPING. Installation and Maintenance. The following regulations shall govern the installation and maintenance of landscaping and screening materials. a) All landscaping materials and screening materials shall be installed in conjunction with site development and prior to issuance of a final certificate of occupancy. b) A letter of credit or other security as acceptable to the CITY shall be deposited with the Zoning Administrator, in an amount equal to ten percent (10%) of the estimated cost of landscaping and/or screening. The letter of credit or other security as acceptable to the CITY, or portions thereof, shall be forfeited to maintain and/or replace materials for a period 18 of time to include at least two (2) growing seasons. A portion of the letter of credit or other security as acceptable to the CITY may be released after one growing season as determined by the Zoning Administrator. c) The property owner shall be responsible for continued maintenance of landscaping and screening materials to remain in compliance with the requirements of this Section. Plant materials that show signs of disease or damage shall be promptly removed and replaced within the next planting season. 9.14 ADDITIONAL AGREEMENTS. OWNER hereby agrees that the CITY shall not release the PLAT to the OWNER for recording until the OWNER executes a Sign Easement Agreement and a Storm Water Pond and Appurtenances Maintenance Agreement, which is in a form that is acceptable to the CITY's attorney. 9.15 RELEASE OF DEVELOPMENT CONTRACT. Upon completion of all DEVELOPER IMPROVEMENTS and all DEVELOPER PUBLIC IMPROVEMENTS, and upon the expiration of the Section 1.15G. TWO YEAR WARRANTY ON PROPER WORK AND MATERIALS, the DEVELOPER may submit to the CITY a draft release of this DEVELOPMENT CONTRACT for review and approval by the CITY's attorney. Thc CITY agrees to cooperate with the DEVELOPER to process a recordable release of this DEVELOPMENT CONTRACT for title purposes provided that said improvements have been completed and said warranties have expired. IN WITNESS WHEREOF, the parties have executed this DEVELOPMENT CONTRACT. CITY OF COLUMBIA HEIGHTS OWNER AND DEVELOPER: By: By: Gary Peterson, Mayor Bruce Nedegaard By: Its Walt Fehst, City Manager STATE OF MINNESOTA 19 COUNTY OF ANOKA ) On this day of ,2002, before me a Notary Public within and for said County, personally appeared to me Gary Peterson and Walt Fehst, personally known, who being each by me duly sworn, each did say that they are respectively the Mayor and City Manager of the City of Columbia Heights, the municipality named in the foregoing instrument, and that the seal affixed to said instrument was signed and sealed in behaff of said municipality by authority of its City Council and said Mayor and City Manager acknowledged said instrument to be the free act and deed of said municipality. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF ANOKA ) On this day of ., 2002, before me a Notary Public within and for said County, personally appeared Bruce Nedegaard, to me personally known, who being by me duly sworn, each did say that he is the of Nedegaard Custom Homes named in the foregoing instrument, and that said instrument was signed in behalf of said Nedegaard Homes, a Minnesota Limited Partnership Company by authority of its and said acknowledged said instrument to be the free act and deed of the Nedegaard Custom Homes, a Limited Partnership Company. Notary Public THIS INSTRUMENT DRAFTED BY: Kevin Hansen, P.E. Public Works Director/City Engineer City of Columbia Heights 637 38th Avenue N.E. Columbia Heights, MN 55421 763/706-3705 20 EXHIBIT A LIST OF DEVELOPMENT PLANS 1. Erosion Control and Grading Plan Humphrey Engineering 7/19/02 2. Utility/Site Plan Humphrey Engineering 7/19/02 3. Landscape Plan Craig M. Bagne 6/26/02 e Street Light Plan (To be approved by the City Planner.) 21 EXHIBIT B DEVELOPER PUBLIC IMPROVEMENTS The items checked with "PUBLIC" below are those DEVELOPER IMPROVEMENTS that are DEVELOPER-PUBLIC IMPROVEMENTS. CHECKED COMPLETION DATE IMPROVEMENT X Public 12/31/02 Utilities X 6/31/03 Landscaping X 6/31/03 Street Lighting Note: Pursuant to Section 2.4, all Developer Improvements must be completed prior to occupancy of any building on Parkside Village Townhomes, except for landscaping and streetlighting, which may be a condition subsequent. 22 EXHIBIT C ESCROW CALCULATION DEVELOPER IMPROVEMENTS 1. Erosion Control $ 127500 2. Utilities $ 3. Street Lighting $ MULTIPLIED BY: 1.25 EQUALS $ For the above work, DEVELOPER shall post cash for $ In addition to the letter of credit required above, the DEVELOPER shall also deposit $2,500 in cash with the CITY contemporaneously with execution of this DEVELOPMENT CONTRACT. This $2,500 shall be to pay the CITY for engineering plan review and inspection fees at the CITY's standard rates charged for such tasks. Upon acceptance of the DEVELOPER PUBLIC IMPROVEMENTS, the CITY shall return to the DEVELOPER any remaining portion of the $2,500 not otherwise charged against the DEVELOPOER for engineering inspection performed by the CITY. To the extent the engineering inspection fees, calculated according to the CITY's standard rates, exceed the $2,500 deposit, the DEVELOPER is responsible for payment of such excess within thirty (30) days after billing by the CITY. 7/3/02 23 PLANNING AND ZONING COMMISSION MINUTES OF THE REGULAR MEETING JULY 9, 2002 7:00 PM These minutes not approved. The meeting was called to order at 7:00 pm by Commission Member Ericson. Roll Call: Commission Members present-Ericson, Schmitt, Yehle, and Johnson. Commission members absent-Ramsdell Also present were Tim Johnson (City Planner), and Shelley Hanson (Secretary). Motion by Yehle, second by Johnson, to approve the minutes from the meeting of May 7, 2002. All ayes. MOTION PASSED. OTHER BUSINESS Bob Streetar, the new Community Development Director, was introduced to the commission members. PUBLIC HEARINGS Case #: 2002-0704 Lot Split 2120 43rd Avenue David Linsk A request has been made for a lot split of the property located at 2120 43rd Avenue NE. Currently 21:20 43rd Avenue NE is an abnormally shaped lot measuring 67 feet in the fi:ont, 25 feet in the back, and 191 feet in depth. The applicant is proposing to acquire a small portion of property measuring 1,080 square feet fi:om the neighbor at 2112 43rd Avenue, and add this portion to his property in order to accommodate a future detached garage addition (see survey). This split would keep both lots in conformance with current City lot size requirements. Section 9.410(4) of the Columbia Heights Zoning Ordinance requires that an application for a lot split be reviewed by the Planning and Zoning Commission which shall provide a report to the City Council either recommending approval or denial of the proposed lot split. There are no previous Planning and Zoning Commission cases on this site. The surrounding property in all four directions is zoned R-1, Single-Family Residential, and is used residentially. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 2 Technical Review: Section 9.903 of the Columbia Heights Zoning Ordinance regulates lot area, setback, height and lot coverage requirements in the R-1 District, and Section 9.603 regulates accessory structures and lot coverage. Applicable requirements are as follows. Minimum lot size shall be 8,400 square feet for a single family home - the proposed split would provide 2120 43rd Ave with 9,920 square feet, and 2112 43rd Ave with 18,105 square feet, both of which exceed minimum lot size requirements. Minimum lot width shall be 70 feet - The current lot width for 2120 43rd Avenue is 67.18 feet, but with the additional square footage the new lot width will be 74.18 feet, thus meeting the City requirement. Detached accessory structures shall be at least 3 feet away from side and rear property lines - there is currently a detached garage on the property at 2120 43rd Avenue, and with a future proposed addition the garage setback will be at 4 + feet, thus meeting requirements. Any lot over 6,500 square feet may have a lot coverage of up to 30% - the lot coverages on both 2120 and 2112 43rd Avenue will be well under 30%, so the proposal meets these requirements. The City Comprehensive Plan designates this area for future low density residential development. The proposal is consistent with the City Comprehensive Plan and meets the minimum requirements of the Columbia Heights Zoning Ordinance. Therefore, staff recommends approval of the lot split. Schmitt noted that there was quite a grade difference between the two properties and wondered if the elevations would present a problem once the split is processed and building commences. Planner Johnson said this would be looked at when the building plan for the garage permit is reviewed. It may require a retaining wall as a condition of the approval if indicated by the City Engineer. The lot split will go to the City Council for consideration at the July 22, 2002, meeting. Motion by Yehle , second by Schmitt, to recommend City Council approval of Resolution 2002- 44for the lot split of 2120 43ra Ave., as it is consistent with City subdivision standards. All ayes. MOTION PASSED. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 3 Case #: 2002-0705-06 Parkside Village 825 51st Avenue Site Plan, Preliminary and Final Plat Approval Nedegaard Homes-Humphrey Engineering 26 unit Townhome Subdivision This is a request for Site Plan, and Preliminary and Final Plat approval of Parkside Village (not St. Timothy Heights as originally indicated), a 2.4 acre owner-occupied 26 unit market-rate townhome subdivision that Nedegaard Homes is proposing to split off from the St. Timothy's Lutheran Church property. Planner Johnson passed out a revised plat showing utilities, proposed parking and access to the subdivision, and other details that were discussed. In 1998, St. Tim's Church approached the City and was working with Nedegaard Construction Group to build a senior housing facility, but the project never evolved. The property was rezoned in 1998 to R-3 multi-family residential in anticipation of senior housing, and the Comprehensive Plan was also amended to allow for a high density residential use, but the project idea failed. The proposed townhome concept had been looked at for the last few years, but never materialized until the church recently decided to sell the property to Bruce Nedegaard for townhome development. The surrounding property on the east is zoned GB, General Business District and is used commercially. The property to the north is zoned GB, General Business. The property to the north is used by the Medtronic Corporation. The property to the south is a combination of single and two-family residential. The area to the west of the subject property, Sullivan Lake Park is zoned R-3 and is surrounded by residential on the south and west sides. Technical Review: Plat- Parkside Village is made up of Block 1, Lots 1-6; Block 2, Lots 1-7; Block 3, Lots 1-6; and Block 4, Lots 1-7. The plat will be approximately 2.4 acres in size and will contain 26 market rate townhome units. The plat lays out four distinct building sites; with Block 1 on the north side containing 6 units; Block 2 on the east side containing 7 urfits; Block 3 on the south side containing 6 units; and Block 4 on the west side facing the park containing 7 units. Each lot will be platted individually according to the building footprint, will share zero lot lines, and will also share open space and common areas with the other owners in the development through a Home Owner's Association. Outlot A - Utility easement over the interior access road. A number of new drainage and utility easements are being proposed as indicated in the plat shown. The City Engineer is reviewing these easements to ensure the utilities serve the development sufficiently. It should be noted that Anoka County surveyors and engineers will review the Final Plat before it is filed to ensure that it meets County requirements. MnDOT is not required to review and give their approval of this subdivision as the development is not adjacent to Central Avenue (Trunk Highway 65). PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 4 Public Works Director Kevin Hansen is also reviewing the watermain, and storm and sanitary sewer locations and designs to ensure that the existing systems are able to handle the projected flow increases (see comments attached). Public Works is also reviewing a hydrology study that was submitted by the site design engineer. The proposed development will utilize existing access from 51 st Avenue as shown on the site plan. This entrance to the development is indicated to be between 24 and 25 feet wide, which according to the City Engineer, should be sufficient for the traffic in this development. The City requires a minimum ora 20 foot fire lane for sufficient access. The proposed circulation system indicated should be sufficient to accommodate the number of units proposed. It should also be noted'that Nedegaard is also proposing an additional access on the northwest side of the project, for emergency purposes. This emergency access would be required and would probably consist of a knock-down gate of some sort. Nedegaard would actually like for the City to allow access to the development from the entrance portion of park property parallel with the westerly lot line, but the project can function without it, and is not dependent on this issue. Planner Johnson stated that visitor parking would be an issue as there is not much provided for in the plan. However, in the revised plat, he noted that Nedegaard is proposing improving the current park entrance by widening it and providing a parking area that could be used by the public visiting the park or for visitor parking to residents of the subdivision. This entrance would then serve as the entrance to the subdivision also. The fencing along the park will need to be moved or revised. Landscaping could be used with whatever type of barrier is constructed to make it more aesthetically pleasing. The proposed site plan/plat indicates that all the setback requirements have been met within the development, including side yard setbacks of 20 feet; and front and rear yard setbacks of 30 feet. However, the ordinance allows for encroachments of up to 3 feet for decorative or omarnental features that complement the development. It should be noted that the creation of this plat and newly created lot line between the subdivision and St. Tim's Church, will result in making a small section of the west side of the church non-conforming as it relates to the required side yard setback. A lot split that was proposed and adopted by the City Council in 1998, but never recorded, allowed for the exact same split. The proposed side yard setback fi'om the church to the property line is approximately 20 feet. However, the required setback from the church to the property line is 25 feet. Each trait is being proposed with at-grade patios that will be complemented with a pedestal type design feature to meet setback requirements, and to articulate an architectural design element. The design of the front facades will also be consistent with ordinance requirements that a minimum of 20% of the fagade facing right of way be windows or doors. The exterior design features incorporate brick, shakes, siding, pedestal style posts, donners, and second floor porches. It should be noted that the elevations will be staggered in the middle of the Block 4 units, and the Block 2 units. An elevation drop of approximately 3 feet from south to north will allow for the units to be staggered and should enhance visual interest of the buildings facing the church and the park. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 5 Technical review: The 26 owner-occupied units proposed are two-bedroom, two-bath, two-car garage, and will be furnished. Brochures are not available as of yet. Minimum floor area requirements are 750 square feet for townhomes - Each unit exceeds this requirement. Minimum garage size requirement is 20 X 20 - Each townhome unit has a two-car garage measuring 20 X 21 in size, and room for a minimum of 2 cars in the driveway. Visitor parking is not required by ordinance, but it may be a good idea to ask for the developer to provide some type 0f visitor parking. This could either be accomplished through widening the drive aisles in between Blocks 4-5, to allow for a few on-street parking spaces, and still provide a 20 foot drive aisle for fire access. Or the City could ask the developer to eliminate one unit to provide an additional number of visitor parking spaces. Maximum lot coverage for the site is 35% or 37,051 square feet of building coverage - This development has a total building lot coverage of 30% or 31,758 square feet. The total % of greenspace for the development is 33,372 square feet, or 32% of total lot area. (See Landscaping plan provided for details on greenspace and planting placement). 20% of building fagades facing a public street, or parking lot shall be windows or doors for residential multi-family residential. The building faqade facing 51 st street (see elevation renderings) has been designed so that the appearance is more reminiscent of a one-story rambler style with a lower roof-line and dormers. This development proposes a variety of architectural features and b_uilding materials that provide visual interest, and meet the intent of the ordinance building design standards. A landscaping plan is required for multi-family development - The ordinance requires a minimum of one tree be planted for every 50 feet of street fi'ontage, and a minimum of 4 trees for every one acre of lot area. All other required setback areas shall be landscaped with grass, trees, shrubs, vines, perennial flowers - A professional landscaping design plan has been submitted (see attached) and proposes well in excess of the minimum required # of trees, as well as consistent shrubbery, sodding, and assorted complementary coniferous, ornamental, and deciduous trees. Park dedication fees were addressed with the new Zoning and Development Ordinance. However, the language adopted did not establish a specific per unit standard. The language refers to a 10% parkland contribution or the cash equivalent of 10% of the estimate of improvements. City Council can make the determination as to what they feel is an appropriate amount - Staff has researched a # of first and second ring suburbs and found that the park dedication fees ranged from between $500 - $1,000/unit. The appropriate Subdivision section may need to be amended in the near future to reflect the City Council' s desires for consistency with other communities. It should be noted that the current Sullivan Park facilities are sparse as it relates to playground equipment. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 6 Trail connection - Staff visited the site and has spoken with Bruce Nedegaard about a trail connection to the Medtronic pathway on the north side of the property. Bruce has indicated that he is willing to put this connection in ifMedtronic is willing to allow for it. In this scenario, Medtronic would need to be contacted and agree to allow for an easement to tap into the existing pathway. It should be noted that the City does currently have utility access to a portion of land adjacent to the trail that could be utilized for a possible path connection. Staffwould strongly recommend this be accomplished if possible, and would allow for actual trail connections between the development and Sullivan Lake, as well as a trail connection between the development and Medtronic. Miscellaneous The Fire Department has reviewed the plat and had a few minor concerns. Most of these concerns have been resolved. The only remaining issue to be worked out is access to all the buildings in case of fire. They want to be able to get to each building without the need of extensions. Engineering also had some concerns. The City Engineer will be reviewing the revisions and will submit his recommendation to the City Council prior to the July 22, 2002 meeting. This is noted as one of the conditions listed as part of the motion. The positive aspects of this proposal are as follows: This development is the type of upgrade market-rate housing that is needed in order for economic growth to occur. This is an in-fill site adjacent to an existing park and lake, and represents a quality development that requires rio subsidy and adds to the overall tax base. There are no negative aspects of this proposal assuming all the conditions are met. Commissioner Ericson inquired about the park dedication fees and if there are any established policies regarding their use. Planner Johnson responded that the current Ordinance language does not address the use of the park dedication fees. He felt the Commission could provide a recommendation, but it is ultimately up to the Council how these park dedication fees would be allocated. Staff recommends approval of the Site Plan and the Preliminary and Final Plat for Parkside Village, as the proposed plat is consistent with the City Subdivision Ordinance and is consistent with the City Comprehensive Plan. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 7 At this time there was some discussion regarding the site plan and some questions were raised. Commissioner Sclarnitt asked about the parking for each unit. Mr. Nedegaard informed the members that each unit has a two car garage and also parking for two vehicles outside the garage. He explained this is pretty common in townhome developments. It was noted that parking along 51st Avenue is not restricted, so additional visitors could park on the street. Yehle asked what the price range would be for the townhouse units. Nedgaard responded they would sell in the range of $200,000 to $250,000. Final costs have yet to be determined, depending on conditions that must be met. Johnson asked who would manage the association after the project is complete. Nedegaard responded that BAN Management (his property management company) would be the property managers for the ill'St three years at least. A1 Bates of 724 51st Avenue lives across the street fi.om the proposed project. He stated that he thought the density of the project was "overkill". He felt it was too many units crowded into a small space. He thinks the project will look like row housing. He would rather have seen the senior project that was proposed a few years ago be built rather than this one. He thought it would have been a better fit for the area and a better use of the property. Ericson asked about the lighting in the subdivision. Roger Humphrey, Humphrey Engineering, stated that street lights would not be used. There are already lights around the park trail, which is adequate for the park area. Normal garage lights will be used on each townhouse unit. Yehle questioned their plan to widen the present park entrance for use by the subdivision and park visitors. There was some discussion regarding setting precedence of using park land for the benefit of the proposed project. Even though this can be decided on a case by case basis, there was concern because of other potential developments being considered. The Engineer stated that storm drain work and improvements will need to be done in this access area and they felt it was a perfect place for the overflow parking that could be used by both the Public for park use and for visitors to the townhouse residents. This could be done by establishing an access easement, and by drawing up an agreement so that maintenance of the access and parking area would be done by the Association. The Commission members also felt that the park dedication fees should be used to improve Sullivan Lake Park specifically as more people and children will be using the park. Some of the fees could also be used to replace the fencing that is currently there and in poor condition. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 8 Motion by Johnson, second by Yehle, to recommend City Council approval of the Preliminary and Final Plat for Parkside Village as the proposal is consistent with the City Subdivision Ordinance, and also is consistent with the City Comprehensive Plan. All ayes. MOTION PASSED. Motion by Johnson, second by Yehle, to recommend City Council approval of the Preliminary and Final Plat for Parkside Village and all that identified on the plat submitted at 825 51st Avenue NE, subject to the following conditions: 5. 6. Ali ayes. City Engineer review and approval of Final Plat, and any changes deemed necessary. City Council review and approval of park dedication fees of $75O per unit and that such fees be used to improve Sullivan Lake Park. Fire Department review and approval of access and watermain issues and any changes deemed necessary. Development Agreement defining requirements and responsibilities of City and Developer. Developer required to make a connection on the north side of the development to the Medtronic walking pathway that connects to the Sullivan Lake pathway. That City Staff and the City Attorney review the potential use and maintenance of the access entrance to the park and subdivision, as well as additional parking area. MOTION PASSED. NEW BUSINESS Request for Project Extension-Heritage Properties (Rainbow Site) The Heritage Property Investment Group has requested a one-year extension of the site plan approvals that were granted for the multi-tenant retail space by the Planning & Zoning Commission on August 7, 2001. At that time the Commission approved separate but concun'ent site plans for the Central Valu Center at 4300 Central Ave for a Rainbow Fueling Center and a 9,000 square foot multi-tenant retail building to be constructed in the front portion of the parking lot. These site plan approvals are valid for a period of one year, during which some substantial development or construction shall take place. The Rainbow Fueling Center building permits were issued but no construction has taken place to date. Staff is expecting construction to start this summer. However, the retail building has not been started and they are requesting a one- year extension of their site plan approvals. Jim Hoefl, attorney, indicated that the Planning & Zoning Commission should consider the matter and make a motion regarding the request. This request is a result of numerous staff contacts to keep the formerly approved project alive. The extension would allow the property owners some additional time to get the project started. It was noted that two project managers have left since the project was proposed. This turnover has caused problems with filling the potential retail spaces. PLANNING & ZONING MINUTES JULY 9, 2002 PAGE 9 Staff recommends the Commission grant the one-year extension to Heritage Property for the proposed retail operation at 4300 Central Avenue NE. Motion by Yehle, second by Schmitt , to approve a one year extension of the site plan approvals for the multi-tenant retail operation at 4300 Central Avenue NE. All ayes. MOTION PASSED. MISCELLANEOUS ITEMS Bob Streetar, Community Development Director, informed the Commission that the City Council had passed aa Emergency Ordinance callin~ for a Moratorium on the I- 1 and I-2 Zoned properties south of 40th to 37th Avenue and from 3rd"Street to Jackson St. This is meant to keep the Commission informed of Council Action in reference to the proposed re-development of this particular area. Motion by Yehle, second by Johnson, to adjourn the meeting at 8:02pm. All ayes. Respectfully submitted, Shelley Hanso_n Secretary COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) REGULAR MEETING MINUTES OF JUNE 18, 2002 CALL TO ORDER - The Regular Meeting of the Columbia Heights Economic Development Authority (EDA) was called to order by President Ruettimann at 6:34 p.m., Tuesday, June 18, 2002, in the City Hall, Conference Room 1,590 40th Avenue NE, Columbia Heights, Minnesota. ROLL CALL Commission Members Present: Commission Members Absent: Staff Present: Robert Ruettimann, Patricia Jindra, Marlaine Szurek, Gary Peterson, Julienne Wyckoff, and Bruce Nawrocki Bobby Williams Walt Fehst, Executive Director Bob Streetar, Deputy Executive Director Randy Schumacher, Community Development Assistant Cheryl Bakken, Secretary Mark Nagel, Housing Assistant CONSENT AGENDA Approval of Minutes Move to adopt the minutes of the May 20, 2002, regular meeting as presented in writing. Financial Report and Payment of Bills Move to approve Resolution 2002-09, Resolution of the Columbia Heights Economic Development Authority (EDA) approving the financial statements for May, 2002 and approving payment of bills for May, 2002. MOTION by Nawrocki, second by Jindra, to adopt the consent agenda items as listed amending the minutes as follows: Page 3, Industrial Center Request for Qualifications, paragraph three, should read: Nawrocki questioned if Awsumb has Industrial Development experience. He also questioned if Welsh Companies should not be considered because of the way he treated the business owners of the 49th and Central (Hilltop) strip mall unfairly. Page 4, Kmart Update should read: Fehst indicated he recently spoke with Gerry Herringer. MeComb recommended Herringer look at the whole eleven plus acres and what can be done with it. The letter enclosed in the EDA packet outlines the steps to be taken in the next two months by Herringer. All ayes. Motion Carried. ITEMS FOR CONSIDERATION REQUEST FOR QUALIFICATION INTERVIEWS Streetar indicated there is a total of seven developers will give a 20-minute presentation by each, followed by a lO-minute question period at the end. Economic Development Authority Meeting Minutes June 18, 2002 Page 2 of 5 UNITED PROPERTIES United was represented by Dale Glowa, Senior Vice President, along with Todd Hanson, Vice President and Jason Sell, Associate. Glowa indicated United Properties is one of the oldest, full service real estate companies in the area owned by the Pohlad family. In the last year they have developed over 350 million in real estate, have approximately 450 employees made up of' 1) a real estate developers; 2) a brokerage division; 3) a property management team; 4) a construction division; 5) a corporate real estate services division; and 6) an investment group. United specializes in office, industrial, research and development, health care, retail, multi- family, and business park developments. They have developed and acquired land, dealt with land environmental problems, and easement issues for many years. They are affiliated with Oncor International, a group with real estate companies throughout the world. Glowa stated the -first step to their approach would be to develop the plan. They would bring their development team in to work with the City. Hanson stated the second step would be a marketing step. They would look for land available, communicate with businesses, look at relocating businesses, and use their experience, resources and capabilities to market the redevelopment area. Welsh Companies Bob Long, Development/Brokerage Services for Welsh Companies stated they would work closely with Columbia Heights to develop a project to meet the needs of not only the Board, but the residents of the community. Long presented a two step approach to the redevelopment process: 1) identify what are the highest and best uses for the development area; and 2) acquire and development of the land. Dennis Doyle, Chief Executive Officer stated Welsh Companies has been in business for 24 years, is a 125 million dollar corporation specializing in working with intercity and first string suburbs. Dan Blomquist, Sr Vice President of their development team indicated they handle the legal and financial part of Welsh developments. They have developed 4.5 million square feet over the years and currently, are working on developments totaling $55 million. The architect firm of Genesis will work with them to develop a plan. Blomquist indicated they have worked with Genesis on a Phase 4 project involving a 30-acre site in Arden Hills and another Phase 4 project in St. Louis, Missouri involving a 724, 000 square foot development. Welsh uses Wells Fargo and Premier Financial companies. Lynn Sloat, Vice President of Genesis Architect firm, explained that 50% of their time is spent working with the development group and 50% working with outside developers to come up with a Comprehensive Plan. Sloat indicated for the Crossroads of Rosevilleproject, they acquired property, did environmental testing and developed the plan. Bill Krake, President of Welsh Construction explained he works with a team to make sure the projects can be accomplished. Krake gave the example of Vicksburg Village in Plymouth, and a 200 unit, apartment complex called Avalon at Edinburgh in Brooklyn Park. Economic Development Authority Meeting Minutes June 18, 2002 Page 3 of 5 Nawrocki asked what Welsh's involving was in the 49th and Central development. Long indicated they were hired to do property management on the site. INDUSTRIAL EQUITIES John Alien, Managing Partner for Industrial Equities, LLP expressed his interest in the large industrial project. He indicated he has a portfolio of 3, 000, 000 square feet, including the cities of New Brighton, Crystal and Roseville, is well established with Wells Fargo Bank and for long- term financing uses Teacher Insurance and New York Insurance Companies. He has a good working relationship with both City and State agencies, owns all of the properties he has redeveloped, worked with environmental issues on land, has eight employees, owns property in all of the cities surrounding Columbia Heights and has local market knowledge. There would be three documents required for the redevelopment area: 1) a development agreement; 2) a minimum assessment agreement; and 3) an equity contribution for land. Allen felt Columbia Heights is a first string suburb with great opportunities for redevelopment. Wyckoff asked if Industrial Equities wouM work with businesses to relocate them. Allen explained he wouM gladly rent to any of the businesses, but would not work on relocating them. The City would need to float TIF Bonds to acquire properties then sell the land to him for redevelopment. SCHAFER-RICHARDSON INC. Kit Richardson, Principal of Schafer-Richardson Inc. and George Sherman, Sherman Associates, Inc. gave the presentation. Richardson indicated they are a commercial real estate project company and have been in business for 28 years. They partnership with Sherman Associates, Inc., to develop, renovate, syndicate construction, lease, property management, marketing, business relocation and design. Richardson listed some of the projects they were involved in: 1) land and brown fills in the downtown area; 2) senior projects; 3) the old banks building; 4) the old Holman project and they currently, own the old Honeywell site. Sherman stated, they use the firm of Elness Swenson Graham Architecture, which is located in 25 states, with 75people on staff. Elness works 70percent on housing and 30percent on commercial redevelopment projects. They work with principal goals of high quality, public openspace, high streetscape, urban landscaping, and mixed-use developments. Examples of their work are the Richfield Urban Village, Excelsior and Grand, Brooklyn Park, Little Canada, Burnsville and the townhome and senior building between 41st and 42nd and Central in Columbia Heights for Real Estate Equities. Nawrocki questioned why Sherman was working with Schafer-Richardson, as it would seem they would be competitors. Richardson explained the two companies actually complement each other and they wouM be signing into the project with the City as a joint venture. Streetar asked if the project takes three to five years to develop, are they willing to stay with the project. Richardson stated they are very interested in the Columbia Heights project. Economic Development Authority Meeting Minutes June 18, 2002 Page 4 of 5 AWSUMB AND ASSOCIATES~ INC. Gordon Awsumb, President, along with Harland Jacobs, President of Genesis Business Centers, Inc., Mike Kraft, Architect for Shea, Inc., gave the presentation. Awsumb indicated they have developed the Holland Townhomes in northeast Minneapolis, the Columbia Heights Business Center, BMC Industrial in St. Paul, Mankato Place, and the Robbinsdale Shops. Harlan recommended developing another Business Center in Columbia Heights just like the one at 39th and Central to prevent high tech businesses from moving out of Columbia Heights due to their growth in business. Kraft indicated Shea, Inc. has been in business for approximately 25 years and that they focus on municipal and redevelopment planning. Kraft gave examples of their work: 1) Robbinsdale City Center; 2) Whittier in South Minneapolis; 3) Grain Belt Landing; 4) Milwaukee Road Depot; 5) City of Centerville; 6) Grand Marais Development; and 7) Seward Place in Minneapolis. Awsumb indicated they would focus on housing on the park with industrial sites around it. He also stated they would be willing to consider options for financing the project if they were chosen to develop the plan. KLODT INCORPORATED Paul Klodt, President of Klodt Incorporated indicated they have been in business for approximately 40years, tore down over 100 buildings, most of their projects were in the downtown area, developed close to 400,000 square feet of commercial and industrial projects and over 400 apartment units. They hire outside architects for the hotels and building development projects. The ftrm is financially backed by, Heitman Financial Corporation. Klodt presented a drawing ora proposed plan for the industrial center including townhomes, apartments, and some industrial. He recommended using 1.8 million in TIF bonds at 5percent for a 20-year period of time. Schumacher asked how much he would pay for the land on the industrial area project and do they have any experience with DTED or any other clean up procedures. Klodt stated he could pay approximately 5 million for everything and that he has some experience with the clean up process of contaminated land. BANCOR GROUP~ INC. Paul Robinson, Development Manager for Bancor Group Inc. and Peter Pflaum, President and CEO of Plum Investment gave the presentation. Robinson indicated the Bancor Group was started in 1994 and is made up of management partners of Bancor, Plum Investment and VKO Enterprises, which provides, financial support and expertise. Projects consist of single-family developments and blighted or abandon property. Robinson gave an example of their latest project at the old Bailey Nursey in Woodbury where they converted it to townhomes with an arboritium at the entrance. Pflaum indicated he started Lunden Brothers Construction in 1970, which was the largest private construction business in the metro area producing townhomes, condos, and single-family Economic Development Authority Meeting Minutes June 18, 2002 Page 5 of 5 homes until two years ago when he started Plum Investment. His background is mainly in residential projects predominately in the western suburbs. Following the presentations, the Boardmembers discussed the seven candidates. Schumacher reminded the Boardmembers to pick a firm that will help us determine what to build on the industrial site, not the firm that will build what you think should be on the site, which will be determined when a plan is developed and RFP's are sent out. Nawrocki felt John Allen talked at our level, had a good approach, liked the fact that he owns all of his properties, would build a quality building, and has developed expertise in his business. Wyckoff felt Allen should be partnered up with Awsumb & Associates, but felt United was the firm to do the plan. MOTION by Ruettimann, second by Szurek, to recommend to the Columbia Heights City Council the selection of United Properties as the preferred development team for master planning, and determining the highest and best use for all properties in the industrial project area. In addition, authorize staff to develop a letter of understanding setting forth the scope of work, timelines and division of costs for City Council consideration. Upon vote: Jindra- Aye, Peterson- Aye, Nawrocki- Nay, Szurek- Aye, Wyckoff- Aye, Ruettimann- Aye. Motion Carried. Ruettimann directed staff to send out a letter to the other candidates indicating the EDA Board had chosen United to do the master plan and that all development companies interviewed would be considered for future RFP's after the plan is developed. JOURNMENT President, Ruettimann, adjoumed the meeting at 11:15 p.m. Respectfully submitted, Cheryl Bakken Recording Secretary H:\EDAminutes2002\6-18-2002 CHARTER COMMISSION SPECIAL MEETING MINUTES THURSDAY, MAY 23, 2002 7 P.M. KEYES ROOM JOHN P. MURZYN HALL CALL TO ORDER The meeting was called to order at 7:05 P.M. by President Tami Ericson. ROLL CALL Members present: John Banyard, Bob BuboRz (7:20 p.m.), Charles Christopherson, Mel Collova, Tami Ericson, Jim Fowler, Michael Hartcl, Ted Landwehr, Tom Ramsdell, Joe Sturdevant, Theresia Synowczynski Members absent and unexcused: Bill Amzaras, Janis Larson Members absent and excused: Clara Schmidt Also present: Carole Blowers, Recording Secretary; Council Liaison Bobby Williams APPROVAL OF MINUTES Motion by Mike Hartel, seconded by Tom Ramsdell, to approve the minutes of the April 25, 2002 as presented. Motion passed unanimously. CORRESPONDENCE The Recording Secretary or the President had no new correspondence to report. OLD BUSINESS City Open House President Ericson thanked all the Charter Commission members who attended the City Open House at the Public Works Garage on May 22, 2002, from 4 to 7 p.m. at the boards/commission table. Informational copies about the Charter Commission in general were available at the open house. There were also copies of each charter amendment (with current reading and proposed reading) for the public to have. There was not a pros/cons sheet about the proposed amendments available by the time of the Open House. Second Reading of Chapter 6, Section 53, Duties of the City Manager At the last regular Charter Commission meeting, it was discovered that Chapter 6, Section 53 also referred to the duties of the City Manager/Mayor but is not included as a referendum issue by the Charter Commission to date. At that meeting, it was decided to send to the City Council the proposed ordinance change on this chapter and section as well. A first reading at the commission level on the proposed amendment was passed at last month's meeting. The main purpose of tonight's meeting is to hold the second reading of this amendment. The amendment as proposed reads as follows: Section 53. POWERS AND DUTIES OF THE CITY MANAGER. Subject to the provisions of this charter and any regulations consistent therewith which may be adopted by council, the city manager shall control and direct the administration of the city's affairs,,-~.,~,~w~ ....... ,~,-~ ~'~,~,,- v,~-,-,---':~ ~v~ ~ ......... ~,,~,,~ --~ '~,~ ci~ ma~ger's powers ~d duties shall be: (a) To see ~at ~is charier and ~e laws, ordnances ~d resolutions of ~e ciw are enforce; (b) To appoint and, except as herein provided, remove the city clerk, all heads of departments, and all subordinate officers and employees in the departments, all appointments to be upon merit and fitness alone; (c) To exercise control over all departments and divisions of the city administration created by this charter or which may be hereafter created by the council except aa ~ercln (d) To attend all meetings of the council, with the right to take part in the discussions but having no vote; but the council may at its discretion exclude the city manager from meetings at which the city manager's removal is considered; (e) To recommend to the council for adoption such measures as the city manager may deem necessary for the welfare of the people and the efficient administration of the city's affairs; (f) To keep the council fully advised as to the financial condition and needs of the city, and to prepare and to submit to the council the annual budget; (g) To prepare and to submit to the council for adoption an administrative code incorporating the details of administrative procedure, and from time to time to suggest amendments to the same; and (h) To perform such other duties as may be prescribed by this charter or required of the city manager by ordinances or resolutions adopted by the council. There was considerable discussion on this second reading. Commissioner Landwehr had prepared a sheet with pros and cons on having the Mayor or the City Manager in control of the Police Depart-ment. This information was handed out to the commissioners, and they reviewed the pros and cons. Motion was made by Commissioner Hartel, seconded by Commissioner Fowler, to approve the second reading of Chapter 6, Section 53, and forward the proposed amendment to the City Council with the understanding that if the council does not pass this amendment, it will also be placed on the ballot at the next general election in 2002. (Note: Th~s is the third section of the charter that will be affected by the proposed change regarding the issue of the control of the police department. The other two sections of the charter regarding this issue have already been sent to the council. They did not pass unanimously, and therefore are already proposed to be on the ballot this fall. This action tonight is an attempt to make all sections of the charter pertaining to this single issue corrected.) Motion passed: 9 yes, 2 no, 0 abstaining. NEW BUSINESS A sub-committee of Mike Hartel, Ted Landwehr, Joe Sturdevant, Tami Ericson, Clara Schmidt, and Bruce Nawrocki was formed to work on pros and cons of all three ballot questions for this fall. President Ericson asked if members present tonight could stay briefly after this meeting to hold some discussion on the above. NEXT MEETING DATE The next regularly scheduled meeting will be Thursday, July 18, 2002, at 7 p.m. at Murzyn Hall. ADJOURNME~ Motion by Mike Hartel, seconded by Tom Ramsdell, to adjourn the meeting at 7:29 p.m. Respectfully submitted, Carole I. Blower~ Recording Secretary 5-23-02 Page 2 HOUSING & REDEVELOPMENT AUTHORITY REGULAR MEETING MINUTES OF APRIL 16, 2002 CALL TO ORDER - The Regular Meeting of the Columbia Heights Housing & Redevelopment Authority (HRA) was called to order by Chair, Marlaine Szurek at 6:37 p.m., April 16, 2002, in the Parkview Villa Community Room B, 965 40th Avenue NE, Columbia Heights, Minnesota. ROLL CALL Commission Members Present: Commission Members Absent: Staff Present: Marlaine Szurek, Julienne Wyckoff, Bruce Nawrocki, and Bobby Williams, Dennis Ecklund Jr. Gary Peterson arrived at 6:40 p.m. Walt Fehst, Executive Director Randy Schumacher, Acting Comm. Dev. Director Anita Kottsick, Parkview Villa Housing Administrator Cheryl Bakken, Secretary Mark Nagel, Housing Assistant CONSENT AGENDA Approval of Minutes Approve the Minutes of Regular Meeting of February 19, 2002. MOTION by Nawrocki, second by Williams, to approve the minutes from February 19, 2002, regular meeting as presented in writing. All ayes. Motion Carried. REPORT OF MANAGEMENT COMPANY Kottsick indicated the general engineer for HUD's Real Estate Assessment Center was out April 9th to verify the Health and Fire Safety Hazards found at the physical inspection were taken care of. Kottsick indicated the repairs were made the same day the inspection was conducted. The Annual Fire Department Inspection was held on March 12, 2002for all three buildings. No deficiencies were found, however, the Fire Department advised us to upgrade the waste disposal cans to fire proof ones. Staff is currently looking for vendors. Mid Northern Electric installed the surge protection at Parkview units on April 9th. An accident report was filed when a resident fell outside the entrance to the building where the cement sidewalk surface raised. The proper medical procedures were followed and the resident turned out to have no injuries. Staff will check for repairs to the sidewalk when the weather gets better. Fehst indicated Kottsick should check with the Lauren McClanahan in Public Works to see what he does with the sidewalk in front of City Hall, which also shifts each year. ITEMS FOR CONSIDERATION CREST VIEW MANAGEMENT AGREEMENT ONE-YEAR EXTENSION Schumacher stated at the February 19, 2002 HRA meeting, staff was directed to negotiate a one- year extension of the present Management Contract with Crest View Corporation. The proposed contract represents a $3,155 increase or 2% over the present contract. Homing & Redevelopment Authority Minutes April 16, 2002 Page 2 of 4 Nawrocla' felt the increase was more than just 2% and indicated he would be voting against the motion approving the extension. Renie Suflka, stated Kottsick has done a good job, but would like to see more activities for residents than just the picnic. Szurek explained, management has a limited budget to work with, because the building is subsidized by the government. Schumacher indicated there is two issues to consider: O we are going through a new Capital Improvements Plan; and 2) Kottsick has a new software program that she has been trained in on and before she moves to her new position in the fall at the Crest View Senior Assisted Building she will train the new administrator. Szurek thought the Board discussed ending the contract at the end of the year, rather than in dune. Fehst stated at the last meeting it was decided to extend the contract because of Community Development Goal fid, to evaluate the financial status for Parkview Villa. Peterson recommending an amendment to the motion, directing staff to start the bidding proposal process on January 1st, 2003, thus, giving staff enough time for the bidding process. MOTION by Peterson, second by Wyckoff, to approve the One Year Extension of the Management and Maintenance Services Agreement to June of 2003 with Crest View Corporation, based on their proposal dated April 1, 2002, and direct staff to start the bidding proposal process on January 1st, 2003; and furthermore, to direct the President and Executive Director to enter into an agreement for the same. Upon Vote: Peterson- Aye, Nawrocki- Nay, Szurek- Aye, Williams- Aye, Wyckoff- Aye. Motion Carried. 4607 TYLER STREET OPTIONS Nagel indicated at the February 19, 2002 HRA meeting the Board directed staff to review the repayment agreements for HOME and CDBG funds, check with non-profit organizations on purchasing the 4-plex, and look at other options to keep the unit by possibly increasing the rents. Nagel explained some of the options the Board could take. The first option would be to make no changes and we continue to loose money with no payback to the reserve account. The second option would be to sell the 4-plex for its appraised value of $165, 000 and payback the entire $40,000 of HOME funds and approximately $36,395 of CDBG funds, leaving about $90,000 to payback the Reserve Account. Third, we couM sell to a non-profit organization, which would keep the rents lower for the residents and the City wouldn't have to payback the HOME or CDBG funds. The fourth and last option, would be to hold onto the building until the agreements signed with Anoka County for HOME and CDBG funds expires on May 21, 2009, and sell the 4-plex on the open market with no restrictions, payback the Reserve Account and have $90,000 left for other projects. Nagel recommended choosing an option to recover the $90,000 by selling the unit. Housing & Redevelopment Authority Minutes April 16, 2002 Page 3 of 4 Szurek asked if ACCAP purchased the building, would be have to payback the funds and could we specify the type of housing the building is to be used for on the purchase agreement. Nagel stated that was possible. Nawrocki asked what is the current rent being charged in the building. Kottsick indicated the minimum of $350 has been charged since the building started. Nawrocki suggested Option 4, to hold onto the property until the agreements expire and increase the rents to $500 in the meantime. Peterson indicated there will be some major repairs coming up in the next 8 years to the building and we would have to increase the rents to cover those costs, possibly using what the Social Security increases over the years would amount to. Peterson also stated that the property was purchased originally to clean up the area, not to become rental owners and asked what kind of dollar value would we come up with by selling the 4-plex on the open market. Nagel indicated it would depend on if we sold it to a non-profit or on the open market. Fehst suggested possibly sending out an RFP for bids to both non-profit and profit sales. Szurek directed staff to get an appraisal and some bids from non-profit and profit firms for the next HRA meeting. PROPOSAL FOR CAPITAL IMPROVEMENT PROGRAM ENGINEERING SERVICES Nagel explained one of the main parts of the PHA Plan is a Comprehensive Capital Improvement Plan, which hasn't been done for many years. At the Goals session in January, the need for a engineering inspection was discussed as the first step in reviewing the options for Parkview Villa. Staff contacted some engineering firms for bids, with two companies responding, Sierra Construction/RLK and TKDA. The bid from TKDA was $800 lower than Sierra. Staff recommended entering into the agreement with TKDA. MOTION by Nawrocki, second by Williams to approve the contract with TKDA for engineering services related to the completion of comprehensive, 20-year, Capital Improvement Plans for both Parkview Villa North and South in an amount not to exceed $6,700; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. All ayes. Motion Carried. MILLAR ELEVATOR~ DAVIS-BACON PAYMENT Nagel indicated on October 16, 2001 the HRA Board approved a motion to make restitution to the five Millar Elevator employees that worked on the Parkview Villa Elevator Modernization in the amount of $6, 709.90, to satisfy Davis-Bacon requirements. Recently, staff received notification from Millar Elevator that there was a wage increase on July 5, 2000. Therefore, the amount due comes out to about $400 more, for a total of $7,109.47. Housing & Redevelopment Authority Minutes April 16, 2002 Page 4 of 4 MOTION by Peterson, second by Williams, to authorize payment of $7,109.47 to the five, Millar Elevator Service Company employees, in the attached amounts to comply with Davis- Bacon requirements for the Parkview Villa Elevator Modernization Project, funded with CIAP dollars. Upon Vote: Peterson- Aye, Nawrocki- Nay, Szurek- Aye, Williams- Aye, Wyckoff- Aye. Motion Carried. ADMINISTRATIVE REPORTS PHAS SCORE Schumacher reported staff received the Public Housing Assessment Scores from HUD. In the year 2000 our overall PHAS Score was 88 and in 2002 it was 96. Kottsick and staff have been working very diligently to improve the programs and reporting systems at Parkview and should be commended for their efforts. ADJOURNMENT Chair, Szurek adjourned the meeting at 7:34 p.m. Respectfully submitted, Cheryl Bakken Recording Secretary H:~HRAMinutes 2002\4-16-2002