Loading...
HomeMy WebLinkAbout1999-06-17 BOA SP MINUTESBOARD OF ADJUSTMENT AND APPEALS CITY COUNCIL CHAMBERS June 17,1999 The special meeting and Executive Session of the Board of Adjustment and Appeals of the City of Apache Junction,Arizona was held on June 17,1999 at the Apache Junction City Council Chambers,pursuant to the notice required by law. CALL TO ORDER Board Members Present: Board Members Absent: Staff Present: Guests Present: Jim Pfeifer,Chairman Mari Gardner,Vice Chairman John Hartwig Howard Littell Kent Slocum (late) Elise Otero Paul Michaud,Associate Planner Rudy Esquivias,Associate Planer R.Joel Stern,City Attorney Kathy Connelly,City Clerk Glen Van Nimwegen,Director of Development Serv. Curtis Shook,City Manager Vice Mayor Surra Chairman Pfeifer said he would entertain a motion to recess to an Executive Session. Gardner/Hartwig MOVED THAT THE BOARD ADJOURN FOR AN EXECUTIVE SESSION AT 6:09 P.M. Vote:4-0 The motion carried. The Public Hearing reconvened at 7:00 p.m. ACCEPTANCE OF AGENDA Gardner/Littell MOVED TO ACCEPT THE AGENDA DATED JUNE 17,1999 Vote:5-0 The motion carried. Chairman Pfeifer said he would entertain a motion to accept the minutes dated March 8,1999. Slocum/Hartwig MOVED TO ACCEPT THE MINUTES DATED MARCH 8,1999. Vote:5-0 The motion carried. PUBLIC HEARINGS CASE BA -2-99 ENGLEWOOD DEVELOPMENT)Chairman Pfeifer explained this is a request by Englewood Development Company Incorporated,represented by Mike Surak, President,who is appealing the assessment of roads,parks,police,library, and municipal building development fees for their CB -2 general commercial zone proposed 117 unit apartment complex to be located at 380 South Phelps Drive, just southwesterly of the intersection of South Phelps Drive and West Apache Trail.He then asked for staff briefing. Mr.Glen Van Nimwegen stated that the applicant's contention is they were not aware of the development fees that the City has passed several years ago that provide impact fees for municipal buildings,police service and a number of other things including parks,open space and libraries. Mr.Van Nimwegen stated that our contention is that it was up to the developer through his due diligence to become aware of the development fees.Basically what staff's contention is that the developer is asking us to pay for their faulty due diligence or research during that period. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 2 Mr.Van Nimwegen said he would go through kind of the chronology of events that happend with this case,that there were certain agreements entered into between the developer and the City in order to receive support for their project and have the City basically present that support to the State of Arizona so that they could acquire certain income tax benefits for developing this project south of the ABCO Plaza off of Phelps Drive. Because of those tax,what we feel are kind of lucrative income tax benefits, there really isn't a overriding financial impact we think by imposing these fees.We don't feel that you can find that there is an overriding practical difficulty or an unnecessary hardship provided by the City requiring development fees like we have for a number of developers throughout the period of time that we've had the development fees in effect. Mr.Van Nimwegen said there are a number of ways you can challenge the development fees,and we'll talk about that in a little bit more detail a little later on.The ordinance sets aside areas where you can ask for offsets.You can challenge the multipliers that the consultant put together in that report.Basically,it give them a chance to bring in their own experts and look at whether those fees outlined in that ordinance are correct, or maybe they're too high,maybe they're too low,and there's an opportunity to contest it that way. Mr.Van Nimwegen continued to say the developer also can enter into an agreement with the City — a development agreement where they agree to do other improvements instead of meeting the development fees.There's offsets in the form of if there's street right-of-way dedications or,for instance,they may be doing utility extensions above and beyond the normal thing you would require with development.The City can grant offsets for that.They can ask to have the fees refunded to them if they can show that the City hasn't used them in a seven year period. There are a number of ways that the developer can try and if he's aggrieved by the fees,find other ways to solve those problems.We believe it really wasn't the intent of this ordinance for the Board of Adjustment to basically waive all fees.It is in the ordinance and that's why we've basically put together the hearing before you tonight. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 3 Mr.Van Nimwegen stated that if the Board was to act in favor of the developer and basically waive the development fees,we believe that would be contrary to the Arizona State Constitution which precludes a city from granting gifts to any private individual or development organization. Mr.Van Nimwegen stated he would briefly go through some history of events and show the Board a few exhibits that the staff provided for them in the staff report.He said if the Board has any questions please ask them so that we can run through this quickly. Mr.Van Nimwegen stated that this all started in December of 1996 when the City adopted ordinance number 973,which amended the City code and basically provided for a way of acquiring development impact fees,which basically are a way for a city to pay for the cost of growth or the impacts of growth.Right around October -November of '97,a developer,Englewood Development,came and met with staff several times to talk about a project they were proposing in Apache Junction.The main reasons for talking to us at that point was because they hoped to gain support for their project through the State of Arizona. On May 5°,1998,Englewood made a presentation to the City Council.It was the first time the City Council saw the request.They provided elevations and site plans of their project.They talked about their track record of developing over 1500 apartment units.It was kind of the first time they started setting aside or laying the groundwork for this type of quality development.There's a number of recreation facilities here,it's a good project,and it deserves your support. Mr.Van Nimwegen said that on June 5°of 1998,to move into the formal hearing with the City Council where the City would actually say,yes,we support your project and we'll grant points,then the Development Service Director,Larry Harmer,provided a memo on the project.This is Exhibit 4 in your staff report,and we wanted to point out the fact that he states what we think quite clearly is there could be benefits to this development over and above normally required development fees.I think the developer's contention is they didn't understand what that development fee meant. Mr.Van Nimwegen stated that I think our contention is that that is a preety common term in the development world.Just leafing through our file on this project,there were about 18 letters to the editor and article in local papers and some national papers talking about development fees.And I know it's BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 4 nothing new to you because you've probably lived through that part of the history in Apache Junction and we're still talking about them.We're still talking about impact fees in Apache Junction today. Mr.Van Nimwegen also stated that if you went through a database of Urban Land Institute,which is a pretty common organization.Most developers belong to it.It is a clearing house on information on development.They have at least four basically journals on development impact fees because it has an impact on development and it's something that most developers are aware of. Mr.Van Nimwegen said this staff report was faxed to the vice president of Englewood on June 10°,1998,so they had this in their hands prior to the final Council meeting of June 16°,1998.And,again,the developer presented the project in order to gain support of the City Council.They talked about whether there was adequate utilities in the area,what would be the screening process for getting tenants into this development,and again that there would be a number of amenities including pool,clubhouse,basketball courts,and a tot lot facility or play facility in the project. The Council was impressed with the development and voted to send on to the Department of Commerce five points,which was the maximum number of points that could be recommended for an income tax rebate project.The IRS code does allow states to administer income tax credits to projects that keep rents affordable for a certain percentage of the population.And how those income tax credits are arrived at and how they're used is the state will --they'll grade a project on a number of points from how many low income people would be served by the development,the cost effectiveness of the development,the overall quality of the development.And what's important is the support of the local community for the project.And that's where we came into the area. The developer knew that those five points are critical to gaining these tax credits,and in fact I provided an exhibit in your staff report that showed that there was only two points that separated a winning project from a project that goes on the waiting list and may never receive the credits.So they're very important for a developer. These tax credits can be up to an amount equal to the cost of the development. In this case,the project was estimated at a cost of about six million and the credits that were granted for the project was approximately 528.000.That is a payment for every ten years.That is basically five million in income tax credits for a development. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 5 Mr.Van Nimwegen continued to state that a developer will then take those credits and sell them to a financial organization who will pay for those credits usually about 70 cents on the dollar,and that money is turned into equity in the development,and basically a good portion of the project is paid for.So it's a very lucrative financial technique for development. After the Council approved the project,Mike Surak,the president and owner of Englewood Development,wrote the Mayor,Doug Coleman,and basically emphasized everything that was said in the Council meeting,again setting forth what was the agreement and that the development would provide a number of amenities and be of a high quality status. After that,there was some neighborhood opposition to the project.It went into the paper and because there was zoning on the site,there wasn't a formal public hearing on that.The developer,again,had a neighborhood meeting with the City staff,and again emphasized the quality of the development and the number of amenities that were going to be in the project. Around November,the developer first contacted people in the permit center and asked about what are going to be the cost of developing this project,and I think that's when they first got wind of the development impact fees,or at least that is what they're stating. Michael Monroe,the assistant to the City Manager and also the designated fee administrator,formalized what those impact fees were in a letter to the developer,and basically stated that they would be up to $1257 per unit,and again,there's 117 units in the development. Two months later,the applicant,Englewood,returned with the letter sent back to staff basically saying that they had met with staff since October --November of '97 and they didn't believe they were ever kept or made aware of these development fees.And the letter is attached and it states that they discussed normal permit fees equating to about $30,000 I believe it was.But they're not aware of these impact fees.The letter goes on to assert that the project was planned to have basketball courts,pool,recreation.Again, they're emphasizing that it was quality,but now the veiled threat kind of comes in that,gee if we have these additional costs,we may not be able to give you what we promised you basically.And it closes with a request that the City abate the fees to their development. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 6 On March 8°,one of the original agreements or provisions in the Council staff report and Council meeting was that they would return with elevations land formally show the Council again what they ere going to do.They cam back in March and did that.On March 8°,they presented another letter which talked about the benefits and amenities of the project.March 16°,they made a public presentation to the City Council on the new site plan and elevations of the project.One of the Council members asked if they were going to pay development fees.Phil Nichols,who was the contractor for the project, stated that they had made this request to abate the fees. Michael Monroe,again,sent a letter to Englewood Development explaining the City's position that we were against abating the fees and outlined what we feel the real charges were.There was a mistake in the Englewood's letter to us;there was a difference between I think basically $100 per unit of what that fee was,and he wanted to clarify that.Mr.Monroe also emphasized that he's shocked that a developer would not be aware of what development fees were and because they're becoming increasingly common in U.S.and the Phoenix area. Mr.Van Nimwegen said that Englewood made a request to appeal the application to the Board of Adjustment,and basically that's why we are here tonight. It is staff's contention that the City is really being asked to bear the brunt of what was a mistake by the developer during his due diligence period.We think we did notify them well enough.We thought we were probably speaking the same language and we have it here in writing where we're talking about the development fees being expected.But for whatever reason,the applicant fees they weren't made aware of that. The developer also basically entered into an agreement and sold the City L. -Council on the quality, of the development in order to receive tax credits fug the State of Arizona that helped make this a very lucrative project for them. We feel that the development fees are roughly two percent of the income tax credits received for the project,so in that alone we don't feel that there's really a compelling reason from a hardship standpoint that the City should basically back down and not charge the development impact fees. There are ways that the ordinance provides to reduce the fee.Offset has to do if the developer is doing some additional improvements above and beyond the normal call of duty,which would be utility, extensions,right-of-way dedications.They can petition the City Council and ask that those development fees be reduced in relation to what those additional things are. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 7 On March 8°,one of the original agreements or provisions in the Council staff report and Council meeting was that they would return with elevations and formally show the Council again what they are going to do.They came back in March and did that.On March 8°,they presented another letter which talked about the benefits and amenities of the project.March 16",they made a public presentation to the City Council on the new site plan and elevations of the project.One of the Council members asked if they were going to pay development fees.Phil Nichols,who was the contractor for the project, stated that they had made this request to abate the fees. Michael Monroe,again,sent a letter to Englewood Development explaining the City's position that we were against abating the fees and outlined what we feel the real charges were.There was a mistake in the Englewood's letter to us;there was a difference between I think basically $100 per unit of what that fee was,and he wanted to clarify that.Mr.Monroe also emphasized that he's shocked that a developer would not be aware of what development fees were and because they're becoming increasingly common in U.S.and the Phoenix area. Mr.Van Nimwegen said that Englewood made a request to appeal the application to the Board of Adjustment,and basically that's why we are here tonight. It is staff's contention that the City is really being asked to bear the brunt of what was a mistake by the developer during his due diligence period.We think we did notify them well enough.We thought we were probably speaking the same language and we have it here in writing where we're talking about the development fees being expected.But for whatever reason,the applicant fees they weren't made aware of that. The developer also basically entered into an agreement and sold the City Council on the quality of the development in order to receive tax credits from the State of Arizona that helped make this a very lucrative project for them. We feel that the development fees are roughly two percent of the income tax credits received for the project,so in that alone we don't feel that there's really a compelling reason from a hardship standpoint that the City should basically back down and not charge the development impact fees. There are ways that the ordinance provides to reduce the fee.Offset has to do if the developer is doing some additional improvements above and beyond the normal call of duty,which would be utility extensions,right-of-way dedications.They can petition the City Council and ask that those development fees be reduced in relation to what those additional things are. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 7 They can also challenge the ordinance in the form of the multipliers that are in there.They can basically contest what our consultant,our expert on development fees is saying what the cost of actually providing these services to the City are.They can ask for a refund straight out.They can say you haven't used those fees in seven years;we want them back.That is something that is still open to the developer. It was never the intent of the ordinance to provide a way to waive the fee. And,again,we think that if the Board of Adjustment does waive the fee,there may be a conflict with the State Constitution because in essence the City is granting a special gift to a private individual. If you have any questions with my staff report,I will turn i t over to Curtis Shook,our City Manager,who wants to talk a little bit about the ordinance itself,why i t came about,the history there,and just provide some wrap-up comments.But if you have any questions,I will be happy to answer them for you. Chairman Pfeifer stated that the information that you have on the screen is a copy of a memorandum.He said he could not read i t that well and asked who is i t from and who is i t to? Mr.Van Nimwegen said the memorandum is from Larry Harmer,who's the Development Service Director,and that memorandum goes through Mr.Shook,the City Manager,and is presented to the City Council and Mayor. Chairman Pfeifer asked what was the date on that? Vice Chairman Gardner said June 5 .It's right here '98. Mr.Van Nimwegen said this is Exhibit 4 on the top.It's dated June 5°,1998. Mr.Littell asked if they came in and made their last formal presentation on the 16°of June? Mr.Nimwegen said that is correct. Chairman Pfeifer asked is there any reason for them to have read this memo? Mr.Van Nimwegen said certainly.This is basically introducing their project to the City Council and Mayor,so I think it would be -- BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 8 Chairman Pfeifer asked if they received a copy of this memo? Mr.Van Nimwegen said yes,it was faxed to them roughly five days later on the 10th. Chairman Pfeifer thanked Mr.Van Nimwegen for his presentation. Mr.Shook,City Manager,addressed Chairman Pfeifer,Vice Chairman Gardner and members of the Board of Adjustment said that first at the outset,I'd like to say that development fees are common all over the valley;they're common all over the country.The first time I saw them was as a young assistant in 1984 in Bozeman,Montana.They've been upheld by case law all over the country, and most recently in the State of Arizona by the City of Scottsdale decision in 1995. As a history of development fees in Apache Junction and please bear with me because I may repeat just a little bit of what Mr.Van Nimwegen spoke of earlier in it's goal setting of 1996,the Council passed a policy of having growth pay for itself.And to carry that policy out,it commissioned a study by a professional consulting firm which is country renowned in providing development fee studies. In June of 1996,James Duncan and Associates were retained by the City over the next four months or so.They did a development fee study and came up with the formula and criteria by which a dollar figure was attached to individual capital facilities in the City,such as streets and roads,police,recreation, libraries,as the first four that the fee would cover. And,again,it was under the belief that development should pay for itself and that additional new people into the community put strains on roads,and recreation,and police,and libraries,and that a development fee would be collected upon issuance of a building permit;that is to say that it wasn't charged once it was platted,but rather once a home was built because certainly someone was going to move into the home after it was finished. Our fees are in fact the lowest in the valley.But they were adopted by the City Council in December of 1996 and they were put into effect,they were phased in beginning April 1,1997,at 50 percent of the fee;in May,it went to 75 percent of the fee;and in June,100 percent of the fee was put into BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 9 play.To this point,about $1.2 million has been collected which will play a big part in building roads,pools.Community centers and other things that are anticipated under a community facilities plan which will be given to the Council at the end of July. In this case,I think it's important that we break it --break this whole question into two different phases and two separate sequences. Our first contact with Englewood was that they wanted to come in and they wanted to take advantage of a federal low income tax credit program to build multi -family housing.The City has a need for apartment buildings and the piece of property that they chose was already zoned for multi -family housing. It's important to note that the first contact with Englewood and the first process that was gone through was a request for the City to consider whether it would support their project,number one,and whether or not it was assign points.Had nothing to do with the design or the development of the project. In fact,that was not even really discussed at that time. The Council,based on representations by Englewood Development that the second sequence would be the design and the landscaping and the negotiation of a development agreement,that based on those things and Englewood's agreement to enter into a second sequence and negotiate those things,the Council did pass and did recommend five points for this development to be built. Subsequently,their application was considered and was approved;one of the ones that was approved for a tax credit subsidy in the amount of $530,000. They received that subsidy largely on the support of the City. Mr.Shook offered Exhibit Number 5,which the Council heard and approved on June 16,1998,a submission of recommendation for tax credits.And the Council,with a stipulation that development designs and construction must be negotiated and approved by the City. Mr.Shook said you have seen Mr.Harmer's memorandum which was part of a staffreport which went to the City Council for that meeting of the 16th where they did approve.The staff report was made available to the developer.The staff report is a public document that was part of the packet that went to the Council the night of their deliberation and ultimate passage the 16°of June. Englewood was at that meeting June 16°. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 10 Mr.Shook said it would be incredible to me that they could claim that they didn't see this memorandum,not only because it was part of the packet,but it was also part of the deliberations in front of the Council that evening,and ultimately we know because there's a copy of the fax transmission to Englewood that this memorandum was sent to Englewood to their Vice President,Carla Fewell,on June 10°. Mr.Shook said I have noted for you there in circled letters the words development fees.Now,folks,none of us here are developers I don't think, or if you are,those two words would have sent a shiver up your spine and you would have said,well,now what is that?Now,these are people that are supposed to be expert in this field;after all,they tell us they've been involved in it for 20 plus years.They're experienced in this program.How could they not know all the costs that were associated with the proposed development that they have? Bottom line,the City adopted the development fees in December of 1996.The City staff report in June 1998 — hearing noted the development fees.The Council wrote .a letter of support for the project which led to $530,000 of tax credit subsidy to that project.The Council approved the credit recommendation with the stipulation that there be a development agreement on design,landscaping,permitting and development of the project. Mr.Shook said that had we known that Englewood would come back later and request a waiver of development impact fees,I can tell you that the staff would not have recommended this project,and the Council certainly would not have approved it.Development fees were never discussed,were brought up by the developer,and the City would never have agreed to waive those fees. Englewood has represented themselves as a firm with 20 plus years experience in this field.What I would say to you is not knowing if that's even the case,its not a hardship.The first question of the •fees came formally in February of this year,1999;18 months after we started this process,and six months after one of their representatives,Carla Fewell,called the administrator and asked hey,can we pay these fees before the year end?And then six months later,all of a sudden,we've never hear of the fees. Mr.Shook said I guess what we would contend is that something must have happened with the Englewood financial plan somewhere during that period of BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 11 time and that this request is as a result of that.There is no evidence that the City ever discussed waiving the fees.Englewood freely admits that. There's no piece of paper in which Mr.Harmer or anyone else from the City even implied that the City would ever consider such a thing.The City has helped Englewood with a subsidy of $530,000 and staff has helped them throughout this process.If there's any hardship on Englewood,it's self- imposed by poor planning and a failure to budget cost appropriately.As Mr. Van Nimwegen has said,I think it's clear that the mistake of the developer was not doing proper due diligence. Mr.Shook said he will answer any questions anyone has. Mr.Slocum asked if Mr.Shook made a statement back there that you said at one time that they admitted by a phone or by documentation they were willing to pay these fees by the end of the year,then they changed their mind? Mr.Shook said well,we don't have a letter from Englewood stating that they'll pay the fees.I mean that's just --you know that's a given. Mr.Slocum asked if it was a conversation over the phone. Mr.Shook said we received a call from the Vice President,Carla Fewell,to the administrator --the fee administrator,Michael Monroe,in November asking whether or not they could go and prepay the fees.Michael said no,absolutely not.He said you know the law.The ordinance says you can only pay them when you begin to take a building permit.He declined to receive the money in 1998.Four months later,we received a formal request from Englewood saying, hey,we didn't know anything about them,and now it's creating a hardship,and we're going to have to downgrade our project,so would you waive the fees. Chairman Pfeifer asked was it your impression,sir,that during the conversation in reference to the the fees that they were in fact referring to the development fees? Mr.Shook said yes.Absolutely. Mr.Slocum said then they knew of it then? Mr.Shook said yes,they knew of it. Mr.Slocum said they were cognizance of it. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 12 Mr.Shook said he was not sure but he finds it very difficult to believe, Chairman and Board,that Englewood Development did not know about those fees. I mean right from June of 1991.But even if that's the case,again,I submit not knowing is not a hardship.We think it's just poor diligence on the part of a group that has formally told us that they're experienced in this field. Mr.Hartwig asked if the City of Apache Junction encountered any other out of state developer that has come in and build something? Mr.Shook answered yes. Mr.Hartwig asked if there were any problems with the fees. Mr.Shook said we have had only one other request to wave the fees,and it was by a local person who was building a five unit apartment complex.They asked, the administrator turned it down,and that was the end of it.No appeal was sought.Mr.Shook said I think that if you followed the City for an amount of time,you'll realize how strongly the Council believes in development fees and that development should pay for itself in the community. Mr.Hartwig said so basically what I gathered from what you have just told the Board here,outside of the historical perspective and everything of the development impact fees,is that Englewood was full cognizant of that,and then as a result of their financial plan in some way,shape or form gone haywire,they just want to back out of this if you won't give it to them. Mr.Shook said I don't believe it's their intent to back out.In fact,they have done some rough grading on the site.I do believe that whether it's true that they didn't know or not that something has changed that has caused them to attempt to put a lot of pressure on to get a waiver of the fees.I don't pretend to know what that is. Chairman Pfeifer stated that they haven't said they will back out;they just want you to consider abating. Mr.Shook stated that as Mr.Van Nimwegen has put it,there was a veiled threat in one of the letters that they might have to downgrade the quality of BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 13 the project;they might not be able to put in the amenities,I believe it was their statement,because of this.And,again,I would say that I believe it's fairly clear that the staff has worked along with Englewood and has developed a site plan and that the City will require the site plan that's been approved to be carried out. Chairman Pfeifer thanked Mr.Shook. He then asked if there were any more questions. Mr.Shook addressed the Chairman and the Board,I would like to say that it's somewhat concerning to me that no one from Englewood is here this evening or doesn't appear to be here this evening.And as a result of that,rather than just close the hearing and have the Board take a vote,I would like to request that the Board take a recess so that your Council could discuss that matter, and if there's a problem of notification or communication,that be recognized and that this be continued if that's what's necessary to have happen.Thank you,Mr.Chairman. Chairman Pfeifer asked if there anybody else that wishes to speak from the City?Any other City input? He then suggested to Council that the Board need to consider some options. Mr.McGuire addressed the Chairman and members of the Board.In the interest of ensuring that due process is met,it would probably be in the Board's best interest to take s short recess so we can at least discuss with staff what type of notice was used in this procedure,if we have any indication that notice of the meeting was received by the applicant,if we've had any communication with the applicant since that point. Mr.Pfeifer We can do that in the session,can't we? Mr.McGuire Oh,we certainly can.If we have everyone here from staff,we can certainly ask those questions. Chairman Pfeifer asked who was responsible for notifying Englewood about the meeting tonight?Who --Rudy,would you approach,please? Rudy,I take it you sent them a letter and you probably called them,too? BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 14 Mr.Esquivias stated that he could not find the letter in the file.He said he was not sure if the letter ever went out or not.This is a new process - - this appeal process.We may have missed a step.I can't find the letter. It's not in the file. Chairman Pfeifer said I think we're going to call for a recess and discuss this in an executive session.Can we do that? Mr.McGuire said we don't have an executive session scheduled for this particular topic,but I certainly think that what we need to discuss we can discuss in the recess without going into executive session. Chairman Pfeifer entertained a motion for a recess. Vice Chairman Gardner MADE A MOTION TO HAVE A RECESS. Mr.Hartwig SECONDED THE MOTION Vote:5-0 unanimous the motion carried. Chairman Pfeifer asked Mr.McGuire if there was a need for other executive sessions. Mr.McGuire said he did not feel comfortable moving back into one this evening. Chairman Pfeifer stated he was talking about in the future regarding this same subject. Mr.McGuire said that unless one of the Board members is in need of jurther discussion about the process or further advice,probably not. Chairman Pfeifer explained that we may have a Board member here the next meeting who is not present tonight and we may be missing a Board member that's here tonight.Would i t be prudent to consider an executive session? Mr.McGuire stated that it would be prudent to probably have a shortened version of what we had tonight. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 15 Mr.McGuire Specifically because the Board member who is not here tonight that might be present at that next meeting cannot be involved in any of the discussions that went on at the executive session tonight.So that none of the members were present tonight are able to discuss that with that member. The information that I faxed to you of course I faxed without privilege so that it certainly can be shared with the Board members and I did it specifically for that reason.Buy any of the other discussions we have would have to be reiterated at another meeting. Chairman Pfeifer said we are going to reconvene our regular meeting.And after hearing certain pieces of information about notification of the applicant,the Chair would entertain a motion for a continuance. Vice Chairman Gardner does it have to have a certain number of days for advertisement,everything?So what would a time frame be to meet at another meeting. Chairman Pfeifer said are you asking what kind of continuance do we need;is that what we're talking about? Vice Chairman Gardner answered yes. Mr.McGuire addressed the Chairman and members of the Board.I would certainly recommend that a minimum the statutory 15 day period from the time that we would be able to get notice to the applicant be observed,in light of the relative closeness of your next regular meeting,that would probably be the date certain that I would recommend that you continue it to,and provide the staff with about a week and :a half to get the notice out and received back, and still know that we have 15 days prior to that hearing for the applicant to have fair notice. Chairman Pfeifer asked if that would be enough time. Mr.Hartwig asked if that would be the first Tuesday of July. Vice Charman Gardner statedAhat would be July 12,the second Monday of the month. BOARD OF ADJUSTMENT AND APPEALS JUNE 17,1999 PAGE 16 OLD BUSINESS None NEW BUSINESS None REQUEST OF STAFF None- INFORMATION AND REPORTS None SELECTION OF MEETINGS.TIMES.LOCATIONS AND PURPOSES Vice Chairman Gardner MOVED THAT THE BOARD MEET ON JULY 12,1999 WITH AN EXECUTIVE SESSION AT 6:00 P.M.,A WORK SESSION AT 6:45 P.M.AND THE REGULAR MEETING AT 7:00 P.M.FOR THE PURPOSE OF DISCUSSING THE ENGLEWOOD DEVELOPMENT CONTINUANCE. Mr.Littell SECONDEDI THE MOTION. Vote:5-0 the motion carried. ADJOURNMENT There being no further business to discuss,and with no objections,Chairman Pfeifer adjourned the meeting at 8:56 p.m. 6/;;;;WA L/40e 4 aul Michaud.ExecutivePlulMichaud,Executive Secretary James Pfeifer,Chairman BOARD OF ADJUSMENT -AND :APPEALS JUNE 17, 1999 PAGE 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ORIGINAL CITY OF APACHE JUNCTION BOARD OF ADJUSTMENT COMMITTEE MEETING JUNE 17, 1999 6:07 P.M. A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 June 17, 1999 MR. PFEIFER:By the clock up on the wall there, it's seven minutes or so after six.So we're going to open. This is the City of Apache Junction Board of Adjustment meeting dated this 17th day of June, 1999.It's -- as I said it's 6:07 p.m.My name is Jim Pfeifer; I'm the chairman. At this time, I will call for order and request the secretary to call for the roll of members. MR. MICHAUD:Thank you. Mr. Hartwig? MR. HARTWIG:Present. MR. MICHAUD:Mr. Littel? MR. LITTEL:Present. MR. MICHAUD:Mr. Slocum, notice not here in attendance. Vice Chair Gardner? MS. GARDNER:Present. MR. MICHAUD:Chairman Pfeifer? MR. PFEIFER:Present. MR. MICHAUD:And we did want to note that Mrs. Oterro (phonetic) has contacted staff and will not be in attendance this evening. MR. PFEIFER:All right.And so -- MR. MICHAUD:And that's four members, and we do A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have a quorum. MR.PFEIFER:Very good.So we have a quorum, and with a quorum I would entertain a motion to recess to a executive session in some other building -- whatever building they happen to lead us away to. FEMALE VOICE:Development Services. MR. PFEIFER:Okay.I would entertain a motion for such. MR.HARTWIG:I'll second that motion. MR.PFEIFER:-- I haven't heard a motion. MS. GARDNER:Mr. Chairman? MR. PFEIFER:Yes, ma'am. MS. GARDNER:I make a motion that we adjourn for a executive session at 6:09. MR.PFEIFER:We have a motion.Do we have a second? MR. LITTEL:I'll second. MR. PFEIFER:We have a second.Do we need to take a roll call? MR. MICHAUD:Certainly. MR. PFEIFER:Let's do then. MR. MICHAUD:Mr. Littel? MR. LITTEL:Yes. MR. MICHAUD:Mr. Hartwig? MR. HARTWIG:Yes. A/Vv TRONICS, INC. Professional Court Reporting 8c Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MICHAUD:Vice Chair Gardner? MS. GARDNER:Yes. MR. MICHAUD:And Chairman Pfeifer? MR.PFEIFER:Yes. MR.MICHAUD:Motion carries. MR. PFEIFER:So adjourned, so recessed. (Recess for Executive Session) MR. PFEIFER:--public meeting.We opened at -- a little after six, called to order, and we had a roll call with a quorum, we retired to an executive session, and now we will continue with the public meeting. So the next item on the agenda is the acceptance of the agenda. MALE VOICE:Going to have to have another roll call -- FEMALE VOICE:You need to do the roll call again to open this meeting. MR.PFEIFER:We need a motion. MR. SLOCUM:We need a motion. FEMALE VOICE:Roll call -- MR. MICHAUD:Do we do roll call again? MR.PFEIFER:All right.Let's do a roll call to open -- to reconvene the meeting. MR.MICHAUD:Roll call? MR.PFEIFER:Please. ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ MR. MICHAUD:Okay.Mr. Slocum? MR.SLOCUM:Yes.Present. MR. MICHAUD:Mr. Hartwig? MR.HARTWIG:Present. MR. MICHAUD:Mr. Littel? MR. LITTEL:Present. MR. MICHAUD:Vice Chair Gardner? MS. GARDNER:Present. MR. MICHAUD:Chairman Pfeifer? MR. PFEIFER:Present. MR.MICHAUD:And did want to also note, as noted before, Mrs. Oterro will not be here this evening. MR.PFEIFER:Okay.As earlier, we have a quorum, so the next item on the agenda is the acceptance of the agenda. MS. GARDNER:Mr. Chairman? MR. PFEIFER:Yes, ma'am. MS. GARDNER:I move that we accept the agenda as stated for tonight. MR. PFEIFER:We have a motion. MR.LITTEL:I'll second. THE COURT:And we have a second, Mr. Littel. Let's have a roll call. MR.MICHAUD:Certainly. Mr. Slocum? ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SLOCUM:Yes. MR. MICHAUD:Mr. Hartwig? MR. HARTWIG:Yes. MR. MICHAUD:Mr. Littel? MR. LITTEL:Yes. MR. MICHAUD:Vice Chair Gardner? MS. GARDNER:Yes. MR. MICHAUD:Chairman Pfeifer? MR. PFEIFER:Yes. MR. MICHAUD:The motion carries. MR. PFEIFER:The next item is the acceptance of the minutes of March 8th of this year, 1999.I want to entertain a motion to accept those minutes. MR. SLOCUM:I'll make a motion so we accept. MR. PFEIFER:We have a motion. MR. HARTWIG:I'll second it. MR. PFEIFER:And we have a second.Roll call, please. MR. MICHAUD:Mr. Hartwig? MR. HARTWIG:Yes. MR. MICHAUD:Mr. Slocum? MR. SLOCUM:Yes. MR. MICHAUD:Mr. Littel? MR. LITTEL:Yes. MR. MICHAUD:Vice Chair Gardner? A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. GARDNER: MR. MICHAUD: MR. PFEIFER: MR. MICHAUD: MR. PFEIFER: Yes. And Chairman Pfeifer? Yes. The motion carries. Okay.Our next item on there -- our agenda is to hear a request.Incidentally, this request is labeled BA -2-99.It's a request by Englewood Development Company Incorporated, represented by Mike Shurak (phonetic); is that the correct pronunciation?It's president, who is appealing the assessment of roads, parks, police, library, and municipal building development fees for their CB -2 (phonetic) general commercial zone proposed 117 unit apartment complex to be located at 380 South Phelps Drive, just southwesterly of the intersection and West Apache Trail. With that in mind, let's set here. of South Phelps Drive some ground rules We would ask participants who are going to speak tonight -- first of all, all participants other than City employees will be sworn in. Secondly, when called upon, we would ask you go to the speaker's podium and address all of your remarks through the chairman.We would ask you state your name and address, and if you live outside of Apache Junction, please tell us. We are asking each speaker to limit their remarks A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to no more than five minutes, but of course, we know there may be the need to speak longer.And we will determine whether it's too long.We'll come up with some decision as to whether or not things are going on too long.Normally, we allow five minutes.We know we're going to have to allow more than five minutes tonight, so you're assured of more than five minutes. We certainly want to provide the opportunity for all interested parties to speak.If there is a group here tonight that shares a common interest, we would prefer and ask you to please present that interest with a spokesperson. We would ask that in order to provide everyone with the opportunity to speak, you please observe the rules of common courtesy in letting each speaker have his or her say without interruption.Each speaker is required to address all remarks only on the subject, and please refrain from personalizing. The order of speakers on an item -- on this item will be -- there will be a brief -- staff will brief us on the case, we will receive staff's recommendation, we will hear from the applicant and their input, we will hear from others who are in favor, we will hear from those in opposition, we will hear any rebuttals, and then we will close the meeting to the public, and we'll make our decision. With that in mind, I know there was a gentleman up A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at the podium before.I will ask him to stand if he's the gentleman that's going to be presenting us with a brief on this case. MR. VAN NIMWEGEN:Yes, I will be, Mr. Chairman. I'm Glen Van Nimwegen, Development Services Director for the City of Apache Junction. Basically, what you're being asked for tonight, the applicants contention is they were not aware of the development fees that the City has passed several years ago that provide impact fees for municipal buildings, police service -- there's a number of things -- parks, open space, and libraries. Basically, our contention is that it was up to the developer through his due diligence to become aware of the development fees.So basically what staff's contention is is the developer is asking us to pay for their faulty due diligence or research during that period. And also it's very important, and I'll go through kind of the chronology of events that happened with this case, that there were certain agreements entered into between the developer and the City in order to receive support for their project and have the City basically present that support to the State of Arizona so that they could acquire certain income tax benefits for developing this project south of the ABCO Plaza off of Phelps Drive. AJVv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 The -- because of those tax -- what we feel are king of lucrative income tax benefits, there really isn't a overriding financial impact we think by imposing these fees. So we don't feel that you can find that there is an overriding practical difficulty or an unnecessary hardship provided by the City requiring development fees like we have for a number of developers throughout the period of time that we've had the development fees in effect. There's a number of ways you can challenge the development fees, and we'll talk about that in a little bit more detail a little later on.There's ways to -- the ordinance sets aside areas where you can ask for offsets. You can challenge the multipliers that together bring in outlined in that report.Basically it their own experts in that ordinance and look at the consultant put gives them a chance to whether those fees are correct, or maybe they're too high, maybe they're too low, and there's an opportunity to contest it that way. The developer also can enter into an agreement with the City -- a development agreement where other improvements instead of meeting the There's offsets in the form of if there's dedications or, for instance, they may be they agree to do development fees. street right-of-way doing utility extensions above and beyond the normal thing you would require with development. ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 11 The City can agrant (phonetic)(sic) offsets for that.And they can ask to have the fees refunded to them if they can show that the City hasn't used them in a seven year period. So there's a number of ways that the developer can try and -- if he's aggrieved by the fees, find other ways to solve those problems. We believe it really wasn't the intent of this ordinance for the Board of Adjustment to basically waive all fees.It is in the ordinance -and that's why we've basically put together the hearing before you tonight. And I guess, finally, if the Board was to act in favor of .the developer.and.basically waive the development fees, we believe that that would be contrary to the Arizona State Constitution which precludes a city from granting gifts to any private individual or development-organization. So with that, I'll just briefly.run through kind of the history of events, show you a few exhibits that we've provided for you in your staff report.And, again, if you have any questions, jump up and ask them.I'll be happy to try and answer them for you -so that we can run through this quickly. I guess it really started back- in December of 1996 when the City adopted ordinance number 973, which :emended the City code and basically -provided for a way of acquiring A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 , 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12 development impact fees, which basically are a way for a city to pay for the cost of growth -- or the impacts of growth. Right around October -- November of '97, a developer, Englewood Development, came and met with staff several times to talk about a project they were proposing in Apache Junction.The main reasons for talking to us at that point was because they hoped to gain support for their project through the State of Arizona. The -- on May 5th, 1998, Englewood made a presentation to the City Council.It was the first time the City Council saw the request.They provided elevations and site plans of their project.They talked about their track record of developing over 1500 apartment units.And it was kind of the first time they started setting aside or laying the groundwork for that this is a quality development, there's a number of recreation facilities here, it's a good project, and it deserves your support. On June 5th of 1998, to move into the formal hearing with the City Council where the City would actually say, yes, we support your project and we'll grant points, the then development service director, Larry Harmer, provided a memo on the project.This is Exhibit 4 in your staff report, and we wanted to point out the fact that he states what we think quite clearly is there could be benefits to this development over and above normally required development A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 13 fees.And I think the developer's contention is they didn't understand what that development fee meant. And I think our contention is is that's a pretty common term in the development world.Just leafing through our file on this project, there were about 18 letters to the editor and articles in local papers and some national papers talking about development fees.And I know it's nothing new to you because you've probably lived through that part of the history of Apache Junction and we're still talking about them.We're still talking about impact fees in Apache Junction today. Also from a national standpoint, if you -- I went through a database of Urban Land Institute, which is a pretty common organization.Most developers belong to it.It's really a clearing house for information on development.And they have at least four basically journals on development impact fees because it is -- it has an impact on development and it's something that most developers are aware of. This staff report was faxed to the vice president of Englewood on June 10th, 1998, so they had this in their hands prior to the final Council meeting of June 16th, 1998. And, again, the developer presented the project and emphasized the quality of the project in order to gain support of the City Council.They talked about whether there was adequate utilities in the area, what would be the A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 screening process for getting tenants into this development, and again that there would be a number of amenities including pool, clubhouse, basketball courts, and a tot lot facility or play facility in the project. The Council was impressed with the development and voted to send on to the Department of Commerce five points, which was the maximum number of points that could be recommended for a tax -- income tax rebate project. And I guess just to give you a real quick snapshot of what this project is, the IRS code does allow states to administer income tax credits to projects that keep rents affordable for a certain percentage of the population.And how those income tax credits are arrived at and how they're used is the state will -- they'll grade a project on a number of points from how many low income people would be served by the development, the cost effectiveness of the development, the overall quality of the development.And what's important is the support of the local community for the project.And that's where we came in -- into the area. The developer knew that those five points are critical to gaining these tax credits, and in fact I provided an exhibit in your staff report that showed that there was only two points between the -- last year there was only two points that separated a winning project from a project that goes on the waiting list and may never be -- may never ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 15 receive the credits.So they're very important for a developer. These tax credits are usually -- they can be up to an amount equal to the cost of the development.So -- but in this case, the project was estimated at a cost of about six million and the credits that were granted for the project was approximately 528,000.And that's for one -- that's a payment for every -- for 10 years.So that's basically five million in income tax credits for a development. A developer will then take those credits and sell them to a financial organization who will pay for those credits usually about 70 cents on the dollar, and that money is turned into equity in the development, and basically a good portion of the project is paid for.So it's a very lucrative financial technique for development. After the Council approved the project, Mike Surak, the president and owner of Englewood Development, wrote the Mayor, Doug Coleman, and basically emphasized everything that was said in the Council meeting, again setting forth what was the agreement and that the development would provide a number of amenities and be of a high quality status. After that, there was some neighborhood opposition to the project.The -- it went into the paper and because there was zoning on the site, there wasn't a formal public hearing on that.The developer, again, had a neighborhood A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16 meeting with the town -- City staff, and again emphasized the quality of the development and the number of amenities that were going to be in the project. Shortly -- around November I think is when the developer first contacted people in the permit center and asked about what are going to be the cost of developing this project, and I think that's when they first got wind of the development impact fees, or at least that's their -- that's what they're stating. The -- Michael Monroe, the assistant to the city manager and he's also the designated fee administrator, formalized what those impact fees were in a letter to the developer, and basically stated that they would be up to $1257 per unit, and again, there's 117 units in the development. The -- shortly after that, well, actually two months later, the applicant, Englewood, returned with the letter sent back to staff basically saying that they had met with staff since October -- November of '97, and they didn't believe they were ever kept or made aware of these development impact fees.And the letter is attached and it states that they discussed normal permit fees equating to about $30,000 I believe it was.But they're not aware of -- they were never aware of these impact fees. The letter goes on to assert that the project is -- A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 17 again, was planned to have basketball courts, pool, recreation.Again, they're emphasizing that it was quality, but now the veiled threat kind of comes in that, gee, if we have these additional costs, we may not be able to give you what we promised you basically.And it closes with a request that the City abate the fees to their development. On March 8th, one of the original agreements or provisions in the Council staff report and Council meeting was that they would return with elevations and formally show the Council again what they were going to do.They came back on -- in March and did that.On March 8th, they presented another letter which talked about the benefits and amenities of the project.March 16th, they made a public presentation to the City Council on the new site plan and elevations of the project.And one of the Council members did ask if they were going to pay development fees, and Phil Nichols, how was the contractor for the project, stated that they had made this request to abate the fees. Michael Monroe, again, sent a letter to Englewood Development explaining the City's position that we were against abating the fees and outlined what we feel the real charges were.There was a mistake in the -- Englewood's letter to us; there was a difference between I think basically $100 per unit of what that fee was, and he wanted to clarify that.And Mr. Monroe also emphasized that he's ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 18 shocked that a developer would not be aware of what development fees were and because they're becoming increasingly common in U.S. and the Phoenix area. The -- Englewood made a request to appeal the application to the Board of Adjustment, and basically that's where we are -- that's why we're here tonight. So I guess just in wrapping it up, it's staff's contention that the City is really being able -- being asked to bear the brunt of what was a mistake by the developer during his due diligence period.We think we did notify them well enough.We thought we were probably speaking the same language and we have it here in writing where we're talking about development fees being expected.But for whatever reason, the applicant fees they weren't made aware of that. The developer also basically entered into an agreement and sold the City Council on the quality of the development in order to receive tax credits from the State of Arizona that helped make this a very lucrative project for them.We feel that the income or the -- excuse me -- the development fees are roughly two percent of the income tax credits that -- received for the project, so in that alone we don't feel that there's really a compelling reason from a hardship standpoint that the City should basically back down and not charge the development impact fees. There are ways that the ordinance provides to ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 19 reduce the fee.I hit these a little bit earlier.Offset has to do if the developer is doing some additional improvements above and beyond the normal call of duty, which would be utility extensions, right-of-way dedications.Then they can petition the City Council and ask that those development fees be reduced in relation to what those additional things are. They can also challenge the ordinance in the form of the multipliers that are in there.They can basically contest what our consultant, our expert on development fees is saying what the cost of actually providing these services to the City are.Or they can ask for a refund straight out. They can say you haven't used those fees in a -- in seven years; we want them back.And that's something that's still open to this developer. It was -- and, finally, it was never the intent of the ordinance to provide a way to waive the fee.And, again, we think that if the Board of Adjustment does waive the fee, there may be a conflict with the State Constitution because in essence the City is granting a special gift to a private individual. And I'd like to -- at this point, if you have any questions with my staff report, I will turn it over to Curtis Shook (phonetic), our City Manager, who wants to talk a little bit about the ordinance itself, why it came about, the A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 20 history there, and just provide some wrap-up comments.But if you have any questions, I'd be happy to answer them for you. MR. PFEIFER:I have a question.The information that you have on the screen is a copy of a memorandum.I can't read it that well, so maybe you can tell me who it is. Who's it from and who's it to? MR. VAN NIMWEGEN:The memorandum is from Larry Harmer, who's the Development Service Director, and that memorandum goes through Mr. Shook, the City Manager, and is presented to the City Council and Mayor. MR. PFEIFER:Okay.What's the date on that? MS. GARDNER:June 5.It's right here.'98. MR. VAN NIMWEGEN:This is Exhibit 4 on the top. It's dated June 5th, 1998. MR. HARTWIG:And you say they came in and made their last formal presentation on the 16th of June? MR. VAN NIMWEGEN:That's correct. MR. PFEIFER:Was there -- is there any reason for them to have read this memo? MR. VAN NIMWEGEN:Certainly.This is basically introducing their project to the City Council and Mayor, so I would think it would be -- MR. PFEIFER:Did they get a copy of this memo? MR. VAN NIMWEGEN:Yes.This was faxed to them ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 21 roughly five days later on the 10th. MR. PFEIFER:Okay.I don't have any further questions. Questions? MS. GARDNER:No. MR. PFEIFER:We thank you, sir. MR. VAN NIMWEGEN:Thank you. MR. SHOOK:Chairman Pfeifer, Vice Chairman Gardner, members of the Board of Adjustment, first at the outset, I'd like to say that development fees are common all over the valley; they're common all over the country.The first time I saw them was a young -- as a young assistant in 1984 in Bozeman, Montana.They've been upheld by case law all over the country, and most recently in the State of Arizona by the City of Scottsdale decision in 1995. As a history of development fees in Apache Junction -- and please bear with me because I may repeat just a little bit of what Mr. Van Nimwegen spoke of earlier -- in it's goal setting of 1996, the Council passed a policy of having growth pay for itself.And to carry that policy out, it commissioned a study by a professional consulting firm which is country renowned in providing development fee studies. In June of 1996, James Duncan and Associates were retained by the City over the next four months or so.They did a development fee study and came up with the formula and A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 22 the criteria by which a dollar figure was attached to individual capital facilities in the City, such as streets and roads, police, recreation, libraries, as the first four that the fee would cover. And, again, it was under the belief that development should pay for itself and that additional new people into the community puts strain on roads, and recreation, and police, and libraries, and that a development fee would be collected upon issuance of a building permit; that is to say that it wasn't charged once it was platted, but rather once a home was built because certainly someone was going to move into the home after it was finished. Our fees are in fact the lowest in the valley.But they were adopted by the City Council in December of 1996 and they were put into effect, they were phased in beginning April 1, 1997, at 50 percent of the fee; in May, it went to 75 percent of the fee; and in June, 100 percent of the fee was put into play.To this point, about $1.2 million has been collected which will play a big part in building roads, pools, community centers and other things that are anticipated under a community facilities plan which will be given to the Council at the end of July. In this case, I think it's important that we break it -- break this whole question into two different phases and two separate sequences. A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 Our first contact with Englewood was that they wanted to come in and they wanted to take advantage of a federal low income tax credit program to built multi -family housing.The City has a need for apartment buildings and the piece of property that they chose was already zoned for multi -family housing. It's important to note that the first contact with Englewood and the first process that was gone through was a request for the City to consider whether it would support their project, number one, and whether or not it was assign points.Had nothing to do with the design or the development of the project.In fact, that was not even really discussed at that time. The Council, based on representations by Englewood Development that the second sequence would be the design and the landscaping and the negotiation of a development agreement, that based on those things and Englewood's agreement to enter into a second sequence and negotiate those things, the Council did pass and did recommend five points for this development to be built. Subsequently, their application was considered and was approved; one of the ones that was approved for a tax credit subsidy in the amount of $530,000.They received that subsidy largely on the support of the City. I would offer to you Exhibit Number 5, which the ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24 Council heard and approved on June 16, 1998, a submission of recommendation for tax credits.And the Council, with a stipulation that development designs and construction must be negotiated and approved by the City. You've seen Mr. Harmer's memorandum which was part of a staff report which went to the City Council for that meeting of the 16th where they did approve.The staff report was made available to the developer.The staff report is a public document that was part of the packet that went to the Council the night of their deliberation and ultimate passage the 16th of June.Englewood was at that meeting June 16th. It would be incredible to me that they could claim that they didn't see this memorandum, not only because it was part of the packet, but it was also part of the deliberations in front of the Council that evening, and ultimately we know because there's a copy of the fax transmission to Englewood that this memorandum was sent to Englewood to their Vice President, Carla Fewell, on June the 10th. I note for you there in circled letters the words development fees.Now, folks, none of us here are developers I don't think, or if you are, those two words would have sent a shiver up your spine and you would have said, well, now what is that?Now, these are people that are supposed to be expert in this field; after all, they tell us they've been involved in it for 20 plus years.They're experienced in A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 this program.How could they not know all the costs that were associated with the proposed development that they have? Bottom line, the City adopted the development fees in December of 1996.The City staff report in June 1998 -- hearing noted the development fees.The Council wrote a letter of support for the project which led to $530,000 of tax credit subsidy to that project.The Council approved the credit recommendation with the stipulation that there be a development agreement on design, landscaping, permitting and other issues that would be involved with the actual development of the project. Had we known that Englewood would come, back later and request a waiver of development impact fees, I can tell you that the staff would not have recommended this project, and the Council certainly would not have approved it. Development fees were never discussed, were brought up by the developer, and the City would never have agreed to waive those fees. Englewood has represented themselves as a firm with 20 plus years experience in this field.What I would say to you is not knowing if that's even the case, it's not a hardship.The first question of the fees came formally in February of this year, 1999; 18 months after we have started this process, and six months after one of their representatives, Carla Fewell, called the administrator and A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1: 2 • 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 asked, hey, can we pay these fees before the year end?And then six months later, all of a sudden, we've never heard of the fees. I guess what we would contend is that something must have happened with the Englewood financial plan somewhere in -- during that period of time and that this request is as a result of that.There is no evidence that the City ever discussed waiving the fees.Englewood freely admits that.There's no piece of paper in which Mr. Harmer or anyone else from the City even implied that the City would ever consider such a thing.The City has helped Englewood with a subsidy of $530,000 and staff has helped them throughout this process.If there's any hardship on Englewood, it's self-imposed by poor planning and a failure to budget costs appropriately. As Mr. Van Nimweger had said, I think it's clear that the mistake of the developer was not doing proper due diligence. Thank you.I'll answer any questions you may have. MR. PFEIFER:Questions? MS. GARDNER:No. MR. PFEIFER:No questions? MR. SLOCUM:Mr. Chairman, he made a statement back there that you said at one time they admitted by a phone or by documentation they were willing to pay these fees by the A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 end of some year, then they changed their mind? MR. SHOOK:Well, we don't have, Mr. Chairman and Mr. Slocum, we don't have a letter from Englewood stating that they'll pay the fees.I mean that's just -- you know that's a given. MR. SLOCUM:But it was a conversation then over the phone then I guess. MR. SHOOK:We received a call from the Vice President, Carla Fewell, to the administrator -- the fee administrator, Michael Monroe, in November asking whether or not they could go and prepay the fees.And Michael said, no, absolutely not.The -- you know the law -- the ordinance says you can only pay them when you begin to take -- when you take a building permit.And so he had to decline to receive the money in 1998.Well, then four months later, we receive a formal request from Englewood saying, hey, we didn't know anything about them, and now it's creating a hardship, and we're going to have to downgrade our project, and so would you waive the fees. MR. PFEIFER:Was it your impression, sir, that during the conversation in reference to the fees that they were in fact referring to the development fees? MR. SHOOK:Yes.Absolutely. MR. SLOCUM:So they knew of it then? MR. SHOOK:Oh, yes.They knew of it -- A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 28 MR. SLOCUM:They were cogshinate (phonetic) (sic) of it. MR. SHOOK:You know I'm not sure -- I mean I would find it very difficult to believe, Mr. Chairman and Board, that Englewood Development did not know about those fees.I mean right from June of 1998.But even if that's the case, again, I submit not knowing is not a hardship.And I -- we think it's just poor due diligence on the part of a group that has formally told us that they're experienced in this field. MR. PFEIFER:I have no further questions. MR. HARTWIG:I have one.Has the City of Apache Junction encountered any other out of state developer that has come in and built something? MR. SHOOK:Yes. MR. HARTWIG:And no problems with the fees? MR. SHOOK:We've in the history of the fee, we've had only one other request to waive the fees, and it was by a local person who was building a five unit apartment complex. They asked, the administrator turned it down, and that was the end of it.No appeal was sought.I think that if you followed the City for an amount of time, you'll realize how strongly the Council believes in development fees and that development should pay for itself in the community. MR. HARTWIG:So basically what I gathered from ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 29 what you have just told the Board here, outside of the historical perspective and everything of the development impact fees, is that Englewood was fully cognizant of that, and then as a result of their financial plan in some way, shape or form gone haywire, they just want to back out of this if you won't give it to them. MR. SHOOK:I don't believe it's their intent to back out.In fact, they have done some rough grading on the site.I do believe that whether it's true that they didn't know or not that something has changed that has caused them to put -- to attempt to put a lot of pressure on to get a waiver of the fees.And I don't pretend to know what that is. MR. HARTWIG:Okay.Thank you. MR. PFEIFER:They haven't said they'll back out; they just want you to consider abating. MR. SHOOK:The -- as Mr. Van Nimwegen put it, there was a veiled threat in one of the letters that they might have to downgrade the quality of the project; they might not be able to put in the amenities, I believe it was their statement, because of this.And, again, I would say that I believe it's fairly clear that the staff has worked along with Englewood and has developed a site plan and that the City will require the site plan that's been approved to be carried out. ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30 MR. PFEIFER:Thank you. Any other questions? MR. SHOOK:Mr. Chairman -- MR. PFEIFER:Yes, sir. MR. SHOOK:-- Vice Chairman and the Board, I would like to say that it's somewhat concerning to me that no one from Englewood is here this evening or doesn't appear to be here this evening.And as a result of that, rather than just close the hearing and have the Board take a vote, I would like to request that the Board take a recess so that your Council could discuss that matter, and if there's a problem of notification or communication, that that be recognized and that this be continued if that's what's necessary to have happen. Thank you, Mr. Chairman. MR. PFEIFER:Thank you. Is there anybody else that wishes to speak from the City?Any other City input? (No Audible Response) MR. PFEIFER:Council, we need to consider some options. MR. MCGUIRE:Mr. Chairman, members of the Board, in the interest of ensuring that due process is met,- it would probably be in the Board's best interest to take a short recess so we can at least discuss with staff what type of A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 31 notice was used in this procedure, if we have any indication that notice of the meeting was received by the applicant, if we've had any communication with the applicant since that point. MR. PFEIFER:We can do that in the session, can't we? MR.MCGUIRE:Oh, we certainly can.If we have everyone here from staff, we can certainly ask those questions. MR. PFEIFER:All right.Let me ask staff, who was responsibility for notifying Englewood about the meeting tonight?Who -- Rudy, would you approach, please? Rudy, I take it you sent them a letter and you probably called them, too? MR. ESQUIVIAS:Mr. Chairman, I can't find the letter in the file.I'm not sure if the letter ever went out or not.This is a new process -- this appeal process.We may have missed a step.I can't find the letter.It's not in the file. MR. PFEIFER:Well, all right. (Board Confers) MR. PFEIFER:I think we're going to call for a recess and discuss this in an executive session.Can we do that? MR. MCGUIRE:We don't have an executive session A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 32 scheduled for this particular topic, but I certainly think that what we need to discuss we can discuss in the recess without going into executive session. MR. PFEIFER:Oh, discuss it without -- all right. I guess I meant to say a recess instead of an executive session. MR. MCGUIRE:Recess.Just so we can figure out where we're going. MR. PFEIFER:So we would call for a recess.I call for a motion for a recess -- or I'd entertain a motion for a recess. MS. GARDNER:Mr. Chairman? MR. PFEIFER:Yes, ma'am. MS. GARDNER:I make the motion that we have a recess. call. MR. PFEIFER:I have a motion. MR. HARTWIG:I'll second that. MR. PFEIFER:We have a second.Let's take roll MR. MICHAUD:Okay.Mr. Hartwig? MR. HARTWIG:Yes. MR. MICHAUD:Mr. Littel? MR. LITTEL:Yes. MR. MICHAUD:Mr. Slocum? MR. HARTWIG:Yeah. A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 33 MR. MICHAUD:Vice Chair Gardner? MS. GARDNER:Yes. MR. MICHAUD:Chairman Pfeifer? MR. PFEIFER:Yes. MR. MICHAUD:Motion carries. (Recess) MR. PFEIFER:Council, is there a need for other executive sessions? MR. LITTEL:I don't think we have enough time. MR. MCGUIRE:In terms of this evening, I wouldn't feel comfortable moving back in -- MR. PFEIFER:Not tonight.I'm talking about in the future regarding this same subject. MR. MCGUIRE:Unless one of the Board members is in need of further discussion about the process or further advice, probably not. MR. PFEIFER:Well, let me discuss that with you because it's possible that we will have a Board member here the next time we meet that's not here now.And we may be missing a Board member that's here tonight that -- for that next meeting.So with that in mind, would it be prudent to consider an executive session? MR. MCGUIRE:It would be prudent to probably have a shortened version of what we had tonight. MR. PFEIFER:All right. ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 34 MR. MCGUIRE:Specifically because the Board member who is not here tonight that might be present at that next meeting cannot be involved in any of the discussions that went on at the executive session tonight.So that none of the members were present tonight are able to discuss that with that member.The information that I faxed to you of course I faxed without privilege so that it certainly can be shared with the Board member and I did it specifically for that reason.But any of the other discussions we have would have to be reiterated at another meeting. MR. PFEIFER:Well, so -- FEMALE VOICE:-- this case was different from the usually ones I send out. MR. PFEIFER:Okay.We are going to reconvene our regular meeting.And after hearing certain pieces of information about notification of the applicant, the Chair would entertain a motion for a continuance. MS. GARDNER:Mr. Chairman, may I ask a question first?Does it have to have a certain number of days for advertisement, everything?So what would a time frame be to meet at another -- MR. PFEIFER:What -- yes.What kind of continuance do we need; is that what we're talking about? MS. GARDNER:Uh-huh.Yes. MR. MCQUIRE:Mr. Chairman, members of the Board, I A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 35 would certainly recommend that at a minimum the statutory 15 day period from the time that we would be able to get notice to the applicant be observed, in light of the relative closeness of your next regular meeting, that would probably be the date certain that I would recommend that you continue it to, and provide the staff with about a week and a half to get the notice out and received back, and still know that we have 15 days prior to that hearing for the applicant to have fair notice. MR. PFEIFER:That would be enough time?All right.So -- MR. HARTWIG:Want a clarification though.Would that normal meeting be the first Tuesday of July then? MS. GARDNER:That would be the -- MR. PFEIFER:No, it's not. MS. GARDNER:That would be the -- MR. PFEIFER:It's a Monday. FEMALE VOICE:Monday. MR. HARTWIG:The first Monday of July? FEMALE VOICE:The second Monday. MS. GARDNER:It would be the 12th. MR. PFEIFER:Second Monday of July. MS. GARDNER:12 th of July then. MR. PFEIFER:And that's what we'd be looking at. MS. GARDNER:Okay. A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 36 MR. PFEIFER:So -- MS.GARDNER:Okay. MR.PFEIFER:So, now, Mrs. Gardner? MS. GARDNER:Mr. Chairman, I move that we have a meeting on July the 12th,with an executive session at 6:00, and a work session at 6:45, and the regular meeting at 7:00. MR. PFEIFER:And it's for the purpose of? MS. GARDNER:Discussing the Englewood Development Company. MR. PFEIFER:The continuance. MS. GARDNER:Continuance. MR. SLOCUM:Continuance. MR. PFEIFER:Continuance of that -- MS. GARDNER:That would be almost another meeting because -- MR. SLOCUM -:Well, it's a continuance really. MR. PFEIFER:Just a continuance.That's all we're. doing.We're continuing. MR. SLOCUM:And then the other things come along or just -- MR. PFEIFER:We're continuing the hearing. MR. SLOCUM:Okay. MR. PFEIFER:We need to specify that. MS. GARDNER:Continuing the hearing. MR. PFEIFER:That's the motion. A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 37 MR. LITTEL:second. MR. PFEIFER:We have a second. MR. HARTWIG:He seconded it. MR. PFEIFER:Roll call. MR. MICHAUD:Okay.Mr. Hartwig? MR. HARTWIG:Yes. MR, MICHAUD:Mr. Littel? MR. LITTEL:Yes. MR. MICHAUD:Mr. Slocum? MR. SLOCUM:Yes. MR. MICHAUD:Vice Chair Gardner? MS, GARDNER:Yes. MR. MICHAUD:Chairman Pfeifer? MR; PFEIFER:Yes. MR. MICHAUD:The motion carries. MR. PFEIFER:So with that inmind; let's continue with the remainder of the agenda. Jackie, do we have any old business? FEMALE VOICE:No. MR. PFEIFER:Do :we have any new business? FEMALE VOICE:: No. MR. PFEIFER:Do we have any requests :of staff? (No Audible Response): MR. PFEIFER:Board, do we have any requests of staff? A/Vv 'TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 38 MS. GARDNER:I don't think so. MR. HARTWIG:No. MR. PFEIFER:Well, probably goes without saying we would hope that you get some notifications out, staff. MR. SLOCUM:Yeah. MR. PFEIFER:Any information and reports? MR. MICHAUD:There's nothing to report, Mr. Chairman. MR. PFEIFER:Do we have any executive secretary's report? MR. MICHAUD:No, there's not.There's nothing. MR. PFEIFER:Okay.We've already had a motion for our next session, so the next point is mute, is it not, for setting our next meeting. MS. GARDNER:That would be the date. MR. PFEIFER:It would be the date. MS. GARDNER:Uh-huh. MR. PFEIFER:Call for adjournment.Do we need to vote on that. MR. LITTEL:What about the election of office -- MR. SLOCUM:Well, does that fall in that meeting, too -- MR. PFEIFER:What's that? MR. HARTWIG:I think the election of officers MR. SLOCUM:Of the officers. ANv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 39 MS. GARDNER:-- would come next week -- next meeting, wouldn't it? FEMALE VOICE:Yes. MR. HARTWIG:Well, his term -- MS. GARDNER:It's not advertised for July -- MR. HARTWIG:His term runs out before that meeting would be convened. MR. PFEIFER:I've been informed that they're not going to let me go until they have decided they're going to appoint somebody to replace me, so -- MR. HARTWIG:Does that also come with an attitude adjustment? MR. PFEIFER:Comes with the big dollars, let me tell you. MR. HARTWIG:Okay. MR. PFEIFER:All right.Do we need to vote on an adjournment? MR. MCGUIRE:Yes. MR. PFEIFER:Do we need a roll call on an adjournment? MR. HARTWIG:No. MR. PFEIFER:All right.All right. MR. HARTWIG:You the man. MS. GARDNER:I move that we be adjourned. MR. PFEIFER:I'd entertain a motion on an A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 40 adjournment then.Give your motion. MR. HARTWIG:I'll second it. MR. PFEIFER:And a second. MS. GARDNER:Third. MR. PFEIFER:And a roll call. MR. MICHAUD:Okay.Mr. Slocum? MR. SLOCUM:Yes. MR. MICHAUD:Mr. Hartwig? MR. HARTWIG:Yes. MR. MICHAUD:Mr. Littel? MR. LITTEL:Yes. MR. MICHAUD:Vice Chair Gardner? MS. GARDNER:Yes. MR. MICHAUD:And Chairman Pfeifer? MR. PFEIFER:Yes. MR. MICHAUD:Motion carries. MR. PFEIFER:Do you want our books or you want us to keep our books? MS. GARDNER:No.I think we ought to keep them - FEMALE VOICE:You can keep your books. (Meeting Concluded at 8:56 p.m.) A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ 41 STATE OF ARIZONA County of Maricopa BE IT KNOWN that the foregoing city council meeting was recorded by me; that the statements, questions and answers were recorded by electronic sound recording and thereafter transcribed into typewriting under my direction; and that the foregoing pages are a fully, true and accurate transcript of all proceedings in connection with this city council meeting. I FURTHER CERTIFY that I am in no way related to nor employedby any of the parties hereto, nor am I in .any way interested in the outcome hereof. n 0DATED at Phoenix, Arizona, this day of uti , 1999. My commission expires July 17, 2000 81 L„,u_ir,„±dA, Linda Whittle A/Vv TRONICS, INC. Professional Court Reporting & Transcription Phoenix, AZ