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HomeMy WebLinkAbout1997-12-10 City Council Special MinutesThe special Arizona,was held Chambers pursuant CITY COUNCIL SPECIAL MEETING DECEMBER 10,1997 meeting of the City Council of the City of Apache Junction, on December 10,1997 at the Apache Junction City Council to the notice required by law. CALL TO ORDER Mayor Coleman called the meeting to order at 7:00 p.m. ROLL CALL Councilmembers Present:Mayor Coleman Vice Mayor Surra Councilmember McClain Councilmember Durbala Councilmember Urich Councilmember Insalaco Councilmember Eck Staff Present: Others Present: City Manager Curtis Shook City Clerk Kathleen Connelly City Attorney Joel Stern Development Services Director Larry Harmer Special Counsel William Farrell ACCEPTANCE OF MINUTES OF NOVEMBER 24,1997) )Councilmember Durbala MOVED THAT THE MINUTES OF THE SPECIAL MEETING ON NOVEMBER 24,1997,BE APPROVED AS PRESENTED. Councilmember Insalaco SECONDED THE MOTION. VOTE:Unanimous. The motion carried. PUBLIC HEARINGS PROPOSED ORDINANCE NO.1014/DEVELOPMENT FEES FOR SCHOOLS/INTERGOVERNMENTAL AGREEMENT BETWEEN CITY AND APACHE JUNCTION UNIFIED SCHOOL DISTRICT NO.43 ) SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 1 OF 20 )Special Counsel William Farrell, 10135 E.Via Linda,Scottsdale,briefed the council on the item.He explained to the audience that he is the attorney retained by the council to assist the City of Apache Junction in consideration and possible adoption of Ordinance No.1014.The ordinance will provide for the first school development fee in the State of Arizona.For the benefit of those people who were not at the first public hearing,he summarized the important points brought up in that meeting.The issue of the condition of the public schools in Arizona is of great concern.The Supreme Court decision on the Roosevelt School District case stated the scheme for financing public schools through the property tax as it evolved over the years in Arizona was unconstitutional.The legislature has tried to fix that problem unsuccessfully,and it will probably occupy a lot of time in the next session.The City of Apache Junction is not offering a substitute or alternative to the way in which schools are operated or school capital facilities are funded.The city is not trying to usurp the powers of the legislature or point them in any direction.It has been the intention to find a legal mechanism to recognize the city's contribution towards the ultimate goal of the education of the children who will be attending the city's schools.The increased residential development has placed a strain on the capital facilities of most of the school districts in the valley.People with children expect their children to have an education,their decision to buy a home is not necessarily based on whether they have paid their fair share in property taxes or fees.They expect the school services to be provided. He commented that through reading the Roosevelt School District decision,it was found that education is not covered in the United States Constitution. However,it is covered in Article 11 of the Arizona Constitution.In the Roosevelt case the court pointed out that the legislative intent dealt extensively with the issue of how,why,when and where public education should be made available.The court stated the job of financing schools is not solely that of the Arizona legislature,that local political subdivisions need to take part in the funding of school systems.In Article 11 of the Arizona Constitution,Section 9,the last sentence states "the laws of the State shall enable cities and towns to maintain free high schools,industrial schools and commercial schools".Though it is not a state statute,it is the state constitution,which is a superior body of law.It appears to say that cities and towns should be able to have a hand in the issue of education.In the past,the legislature has authorized people other than school districts to erect public schools,such as the Community Facilities District Bill.He added due to previous litigation,he believes the city may be facing litigation if the ordinance is adopted this evening.However,with other states having approved this method,the city should have a good fighting argument to uphold the authority and constitutionality of the development fee. The development fee answers some fundamental problems that the school district has.The Roosevelt case stated school districts had to take operating and maintenance funding from the capital improvements budget,thereby the schools were losing the money to make any improvements.The schools could not pass bonds for improvements so they deteriorated further.The development fee addresses the issue of funds for capital improvements.It cannot be used for teachers'salaries,school lunches,or textbooks;it must be used for new SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 2 OF 20 construction,placed into a reserve account.It sets up a process for the school board to follow in order to receive funding from the council to assist in building capital improvements.This will provide a mechanism to allow new development in the community and to participate in future capital needs that will be brought about by new development in the community.He added that staff unanimously urges the council to adopt Ordinance No.1014 this evening. Development Services Director Larry •Harmer stated at the last meeting the council heard testimony from James Duncan of James Duncan and Associates,the consultant for the development fee study,and from Dr.Eric Damien Kelly regarding some of the legal ramifications nationwide.He stated they heard comments on three areas from council during that meeting.The first dealt with the effective date,which is scheduled for March 16.Council requested the fees be collected at 100% starting with the effective date;there was to be no phasing in as in the previous development fees enacted.The two other areas were whether appeals could be heard by the city council and the other concerned the replacement and repair of single family residences or manufactured homes.In the case of manufactured homes,if one was removed and upgraded on the same space or if damaged through fire or storm they would not be assessed additional fees. These items will be reflected in the development code section of the city code designating how the fee structure is managed and developed.The corrections have been given to James Duncan and Associates to be made part of the revision scheduled to be heard by council on January 6 and February 3.A final draft will be provided in the next few days.He recalled there was some concern over how the city compared to other communities for development fees in general,and a study showed that even with the addition of the school development fee,the city's development fee program will still be the lowest in the valley,though other communities may be collecting fees on fewer items. hearing on the item. Mayor Coleman opened the public Ms.Maeve Johnson,4520 N.12th Street,Suite 201,Phoenix,the executive director of Valley Partnership, addressed the council.She passed out and read a letter she had written regarding the school development fees.The letter stated that the Valley Partnership opposed the school development fees for two reasons.They do not believe that Arizona law allows for municipalities to impose impact fees for school districts.They do not support solving the funding problem on a piece meal basis.They request the city to postpone adoption until the state legislature adopts a legally acceptable school finance law and the full impacts of the legislation,including tax implications,can be analyzed.The entire package needs to be examined to be sure the needs of the school district are met while reasonably maintaining property taxes and other taxes and fees so an undue burden is not created for new or existing residents, property owners,home owners and/or homebuilders.They support revising the school finance laws. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 3 OF 20 Mr.Clyde Barney,2101 S.Meridian, Apache Junction,addressed the council.He is opposed to the impact fee.He is developing a small subdivision which this fee will add approximately half a million dollars to in the cost of his project.His community is for retired people who do not require schools or police protection,are not on welfare or have jobs.They come in to Apache Junction and spend their money.He feels it is unfair to penalize these people for moving here.He urged the council to not adopt the fees and to look for alternatives. Mr.Ron Reinagel,3355 S.Cortez, Apache Junction,addressed the council.He stated he was initially against the impact fees since he has no children or grandchildren.However,a few weeks ago he participated in a mock interview program sponsored by the high school and chamber of commerce where he met a very high caliber of 18 high school students.He was amazed by their sincerity and their sense of accomplishment.This caused him to think back over his education,including college,which he received at virtually no cost,and that education enabled him to be a productive citizen for the last 30 years.He asked anyone against these fees to reconsider their resistance based on the education they,their children and,in some cases,their grandchildren have received through the public education system.He commented that the impact fee would only add $13 a month to the cost of a single family home on a 15 year mortgage.A new manufactured home amortizes to $3.50 per month for a 15 year mortgage.He asked those against if they would trade that monthly expense for the potential future of the city and country by possibly entrusting uneducated citizens to administer it.He asked the developers who would be in a financial position to purchase their homes in the future if the education of future earners is placed in jeopardy.He requested the council to pass the impact fee. Mr.Spencer Kamps,2111 E.Highland, Phoenix,AZ 85012,addressed the council.He represented the homebuilders association.He passed out a letter to the council.He stated the homebuilders association is opposed to the development fees for two reasons. The primary reason is they believe the fee is illegal.They do not believe municipalities have the authority to impose school impact fees on new residential homes.They believe the legislature is empowered to enact the solution to the school finance issue.They do not believe this will solve the school finance problem in Apache Junction,as it will only raise about $2 million per year,which will not even build an elementary school.The other reason they are against this is they believe it is unfair,as people who do not impact the school system should not have to pay the fee.In addition,a family with numerous children will impact the school district more than a family with few children and should therefore pay more.The district also buses children from the county,with the money only being used inside the city.He does not believe that is fair.He requested council to revisit the issue.He asked if the fee would ever end,be repealed or would it stay at the current amount.He believes if the schools come back in a few years and request it to be raised,that the council would look favorably on that.He SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 4 OF 20 wondered what the checks and balances would be for the future raises to this fee. Mayor Coleman asked if he was aware they are called development fees and not impact fees. Mr.Spencer Kamps stated in his industry they always call them impact fees. Mr.Chuck Bauman,32 S.Barkley #30, Mesa,addressed the council.He is the co -leader of Taxbusters,a group of several thousand property taxpayers -residential,commercial and agricultural.They are trying to abolish the property tax.They feel property owners are better off moving to something like the development fee, wherein they pay a finite fee instead of an infinite tax.He commented the retirement community referred to earlier would have to pay higher property taxes when a large bond is issued to develop the school related to growth if the development fee is not passed.They are better off paying the smaller fee.The property tax is inadequate for funding the schools.This fee provides for growth related capital needs of the schools and would replace the property tax needs in this area.The developers should see this could create some selling points:a responsible way to keep their property taxes down in years to come;a responsible way to provide for schools for their children. This would give the schools the funding they need when and where they need it with little or no resistance from the homeowners.They believe this is a winner for the taxpayers,for the schools and for the developers.His organization hopes the council will pass the fee proposal. Mr.Brad Reed,1350 E.McKellips, Mesa 85203,addressed the council.He represented Providence Homes,which builds exclusively in the East Valley.They are involved in the Sunrise 'Canyon development,and they do not endorse or oppose the development fees. He wanted to give a view of the unfairness of the effective date from the builder's standpoint.They are very retroactive,damaging and unfair.The builder has to shop for his land to develop.He positions himself very carefully in the market based on the land cost,designs the models and uses the land cost difference to upgrade the elevations.All of a sudden a substantial land cost is added,which is unfair.He requested these fees be imposed at the zoning case stage,as at that stage the developer will know how much the land is going to cost at closing.After all of his expenses have been accounted for,he now suddenly has this additional expense which can be very damaging.He suggested another effective date for these matters. Mr.Scot Butler,1702 E.Highland #214,Phoenix,AZ 85016,addressed the council.He represented the Manufactured Housing Industry of Arizona.He commented he testified at the last meeting and would not repeat himself.He wanted to make three points: his industry opposes the adoption of the development fees and the intergovernmental agreement;they do not believe this is a legal mechanism for SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 5 OF 20 school growth,as Titles 9 and 15 of the agreement do not authorize the city to impose an impact fee for school construction or the acquisition of school property to construct schools on,and the statute cited in the agreement that allows governmental entities to enter into agreements does not talk about impact fees;and the final main issue is the affordability of housing issue. There is a disparity across the state between median income levels and the cost of housing.Everything added to it compounds the affordability problem. He believes the city has an affordable housing policy in order for them to receive federal money,and there has not been any discussion on the impact of this decision on that policy. Ms.Carol Owens,P.O.Box 1017, Apache Junction,AZ 85217,addressed the council.She and her husband have had a business in Apache Junction since 1980.She commended the council on the concept of the fees.She thinks it is past time that the developers and the users of these services finally be asked to pay their way.She believes 100% of all the costs incurred should be shifted to those causing the costs to be needed.Current residents should not be assessed for those coming in. However,she did request that those fees not be levied for adult parks,as they will not contribute to the problem of increased schools.She thinks there is enough negative pressure on them and they do not need any more incentive not to come to Apache Junction.She suggested they start collecting the fees the sooner the better for those children coming in with the homes currently being built. Dr.Barry Sutter,1960 S.Cactus, Apache Junction,the superintendent of schools,addressed the council.He stated development fees are good for children and they will help taxpayers. He asked council not to be confused by people saying it is illegal;it will probably go to court and it will be determined there.They believe it is legal,along with their experts and lawyers.He stated they need to think about the future of Apache Junction and its economic development,of which the school system is a partner.They share facilities and try to address local concerns as a city and a school district.He commented the Valley Partnership does not believe the city should do it because of the confusion out there with the state bearing the responsibility that they should have for solving the existing capital facility inequity.Twice it has been ruled illegal by the Supreme Court.He stated they are looking at 4 different progams and they all have good points to them,but none of them solve all of the problems of the districts in Arizona.They are not customized enough for each individual school district's concerns.This fee allows local control,and they believe it is good.It is not the answer,but it allows them to take control of their community and do what they feel is right by the taxpayers.The community has supported bonds in the past,but the city needs to help solve the problem,not leave it all to the state.The state legislature will need some help to solve this complex problem.He admitted it would be difficult for the senior citizens on their fixed incomes,but this will lower the taxes.He suggested some of the developers may not pass the fee on to the buyers but take it out of their own profit margin.He reiterated that this would lower the taxes, SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 6 OF 20 and the school district is all about kids and being responsible to the taxpayers.He requested council to give a positive vote to the ordinance. Mayor Coleman closed the public hearing with no one else wishing to speak.He opened the item to discussion by the council. Councilmember Durbala wanted to see a wording change in Section 7-2-7 on the fourth line.He would like to remove "or subdivisions".He believes that is the intent of what they talked about in the work session (prior public hearing session).This way all subdivisions would go under the single family,detached dwellings,including site -built, manufactured and modular homes at the $1,368. Councilmember McClain stated she thought the experts put that in there for a reason when they had the hearing a year ago.It was supposed to have been reasoned out then. Councilmember Durbala recalled it was discussed last week and it was supposed to be one of the changes.There are studies that prove they would all be considered the same in a subdivision, they would all have the same impact on the school district. Mayor Coleman asked the special counsel if there was a reason for subdivision being included there. Special Counsel William Farrell agreed that if a manufactured home was in a subdivision it would be considered a detached,single family dwelling unit.He believes both councilmembers are correct in their recollections.He recalled Mr.Duncan was originally concerned that mobile and modular homes were being placed in a separate subdivision from the stick -built homes.He felt such a subdivision would not have the impact of a stick -built home subdivision.It was then argued that the city gives permits for any of these homes in a subdivision.He then agreed that if that was the case,then it would have the same impact as the stick -built home.He believes Mr.Duncan wanted to reduce the park setting from a detached,single family dwelling.He added he believes Councilmember Durbala's proposed amendment is consistent with what Mr.Duncan understood the question to be.He believes the park models would still be at the $366 fee even if "or subdivisions"was removed.He deferred to Development Services Director Larry Harmer for his opinion. Development Services Director Larry Harmer would not disagree with the counsel.He stated the wording presented is what was presented at the previous public hearing.It has not been changed and tonight is the opportunity to make such changes. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 7 OF 20 Councilmember Eck asked if the change would need to be made or not. Councilmember Durbala stated he believed the question had been answered,they would have to wait for a vote onit.He asked for Councilmember Eck's comment on it. Councilmember Eck stated it was his understanding that the change would be made. Councilmember Durbala stated it would be made during the time of the motion.He was also concerned about the replacement or upgrading not having any additional charge. Development Services Director Larry Harmer stated that change falls under the actual wording of the development code.The draft amendment has been made and that will be under consideration at the January 6 meeting. There was general discussion by the council and city attorney as to what would be included in that amendment. Mayor Coleman stated he agreed with a lot of what had been said in support of the fee.He does not believe they are trying to create a piece meal solution to the state's educational problems with capital funding.He would support Valley Partnership in their efforts to have that problem corrected.He does not believe this will eliminate affordable housing in Apache Junction,he believes this is a more equitable means of funding schools rather than having an increase in property tax to pay for the additional schools needed.He believes they have the authority as it has been explained to him and he feels comfortable with that. Councilmember Insalaco stated he was originally from Globe and the schools are in terrible shape there.Bond elections do not help;senior citizens will not always go for bond elections. This is a one-time fee that people pay when they come in.If this does not get passed and they have to go to another bond,these same people that we are trying to help will vote this bond down,and they are in the same spot as Globe.He stated we have to do something now to help the school district. Somebody has to pay but nobody wants to pay.Something has to be done and he is happy with what they are proposing to do. Councilmember Urich restated her comment from two weeks ago.She does not have children nor does she intend to have children,but she personally feels it is the obligation of citizens to pay for the education of our youth.Someone paid for her to have an education,and she feels the citizens have an obligation to pay for the education of our youth.She would be opposed to any exceptions on the basis that the citizen does not have children or expect to have children. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 8 OF 20 Vice Mayor Surra reiterated what Dr. Sutter placed before them today:that this is a small part of a large solution that needs to be put in place for school funding.We are doing what we can as local government,addressing a local problem.She hoped everyone would keep in mind that this does not replace all of the capital that is probably needed in order to keep the schools funded properly in that area.It would be our local control over a local problem. Councilmember Eck agreed with the vice mayor.He does not feel they are trying to be a trendsetter,he feels they are trying to do what is best for their community.He believes the ordinance is what is best for the community as a whole,the children and the taxpayers. Mayor Coleman pointed out i t is a development fee.Many of the poorer districts in the state do not have development problems,and it will not solve anything for those districts.It will not cure all the ills,but it can be an important part of our community in helping them to meet our city's growing needs.He closed the discussion and called for a motion. Councilmember Durbala MOVED THAT ORDINANCE NO.1014 BE READ BY TITLE ONLY AND THE READING OF THE ENTIRE ORDINANCE BE WAIVED. Vice Mayor Surra SECONDED THE MOTION. VOTE:Unanimous. The motion carried. City Clerk Kathleen Connelly read Ordinance No.1014 by title only. Councilmember Durbala MOVED THAT ORDINANCE NO.1014,AS READ BY THE CITY CLERK,BE APPROVED WITH THE FOLLOWING AMENDMENTS:ON PAGE FOUR OF THE ORDINANCE,SECTION 7-2-7,THAT "OR SUBDIVISIONS"BE REMOVED OUT OF THE PARAGRAPH. Vice Mayor Surra SECONDED THE MOTION. VOTE:Unanimous. The motion carried. Vice Mayor Surra MOVED THAT THE INTERGOVERNMENTAL AGREEMENT BETWEEN THE CITY OF APACHE JUNCTION AND APACHE SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 9 OF 20 JUNCTION UNIFIED SCHOOL DISTRICT NO.43 FOR THE COLLECTION,ACCOUNTING, DISBURSEMENT AND EXPENDITURE OF DEVELOPMENT FEES RELATING TO CAPITAL SCHOOL FACILITIES BE APPROVED. Councilmember Insalaco SECONDED THE MOTION. VOTE:Unanimous. The motion carried. Mayor Coleman minute recess. Mayor Coleman meeting. NEW BUSINESS called for a fifteen reconvened the PROPOSED RESOLUTION NO.97-42/ GRANTING PERMISSION TO PROVIDE SEWER SERVICE TO SENIOR COTTAGES/PRE-ANNEXATION DEVELOPMENT AGREEMENT ) )City Manager Curtis Shook briefed the council on the item.This is a property located just over the city limits in the unincorporated area of Maricopa County.It is outside the Mesa strip annexation.The developer is here to present his proposal.The council packet includes a memo delineating the interests of the city and a pre- annexation development agreement. Mr.Jim Walker,representing Senior Cottages of America,addressed the council.He added that Curt Laughinghouse, the vice president of tax credit development and Dana Belknap,their attorney, were in attendance with him.He stated Senior Cottages of America is a privately -owned,for profit,development company and project owner.They build quality,affordable,senior housing.They have won 12 awards from 10 different states nationwide.He gave a brief overview of their staff and projects they are currently working on or have recently completed.The proposed site is southeast of 114th Street and Boise,and it will be a $5.6 million project,which breaks down to a little over $60,000 per unit.They build these homes according to the rules in their proposal,and if they do not follow those rules,they will lose tax credits from the state,which they do not want to have happen.The proposal is 92 units with 6 market rate rents. There are one,two and three bedroom units,ranging from 760 sq.ft.to 1100 sq.ft.All the units are accessible and adaptable for the disabled.They are also adaptable for hearing and vision impaired.Ten percent of the units will be set aside for the physically disabled in the community,to be filled with the assistance of local support groups.All tenants will be income qualified per federal government requirement,enforced by the state and federal SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 10 OF 20 government.Rents range from approximately $350 to $750 depending on the size and qualifications.A third party market study taken within a 4-6 mile radius of the site shows that affordable senior housing is needed in the community. This will be marketed in the community by using the local newspapers,local support groups and churches.The leases are one year leases or longer for permanent residents.Construction is single story,slab on grade,with individual entries into each unit.They are stick -built on site with a southwest design.Amenities include a pool;a community room which includes washers and dryers,a kitchen,restrooms,and a recreation area;shuffleboard, horseshoe pits;walking path;picnic area;air conditioning;attached and detached garages.They intend to establish a resident council to advise on senior needs and activities.The reason for the urgency is they were not given a tax credit award from the state until September.The state requested some design changes which were not given final approval until late October. They then had to learn about the annexation process and options for the project.In order for them to carry over the tax credits into 1998,they have to be able to justify that 10% of the burden has been placed with payments made in 1997.A lender has to be on board,but that lender questioned whether sewer would be available.They have to be able to supply the documentation and information to the state by December 15,or the tax credits will not be carried over.They are excited about this project,produce quality products and feel they will be filling a need for this community.He requested they approve the resolution to allow the sewer district to the site. defined senior citizens. citizens as 60 years ol presentation he stated pictures show stairs. Councilmember Urich asked how he Mr.Jim Walker defined senior d or older in the State of Arizona. Councilmember Urich asked why in the the units would be built at ground level yet the Mr.Jim Walker explained there may be a time,depending on the land layout,where some stairs may occur,but they will be at different levels so that the unit will still be walk in.This project,however,has flat land and there will be no steps. Mr.Curt Laughinghouse of Senior Cottages of America stated that every unit will have a 100% accessible path to that unit.Every part of the site will be accessible at less than 5% grade. He reminded the council that they set aside 10% of the units for physically disabled persons.They also carry on site equipment to convert units as appropriate for the person living there.He passed around additional pictures for the council. America special counsel SPECIAL MEETING OF THE DECEMBER 10,1997 PAGE 11 OF 20 Ms.Dana Belknap,Senior Cottages of ,stated they are asking for the council to give them CITY COUNCIL permission for the sewer district to serve them with sewer.The other item on the agenda concerns the conditions under which the council will consent to the district's provision of their service.They have agreed to be annexed whenever the city council wants at any time.It is at the council's option. They also agree to pay all applicable development fees that are due when they pay the building permits,payable before service from the sewer district is given.They agree to submit their development plans for city review and comment.She commented this is what they are giving in return for permission to have sewer service. Councilmember Durbala stated the pre -annexation agreement has a five year termination date from the date of execution under letter Q. Ms.Dana Belknap stated they would have a five-year window in which to annex the project.Development will start next year. Councilmember Durbala stated he had wanted it clarified as she had commented that there was no time frame on annexation. Ms.Dana Belknap stated she had misspoke.There is a five year time frame on the term of the agreement. Vice Mayor Surra asked what kind of control would the council have over the development plans insofar as council being able to make any changes or their meeting city specifications. Mr.Curt Laughinghouse stated that in their original letter and in every conversation since they have agreed to comply with any regulation for development that does not conflict with Maricopa County.They will build under Maricopa regulations and building permits,but they will submit identical plans to Maricopa County and the city concurrently.They will comply with anything that is in conflict to the degree they can.He cannot give an answer for control.He explained the covenant they have with the state will give the state control of the site for thirty years.There is quite a bit of control,but,in example,if Maricopa County has some specific ideas on elevations and the city does also,they will do their best to merge the ideas,but Maricopa would have to prevail. Vice Mayor Surra stated the minimum standards would prevail so that the city's standards could not be less than those.She asked what would happen if the city's standards were greater than Maricopa County's standards,such as the landscaping requirements. Mr.Curt Laughinghouse stated they would be willing to comply with standards that are greater than Maricopa County's standards. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 12 OF 20 Vice Mayor Surra asked where that appeared in the agreement. Mr.Curt Laughinghouse stated he did not know.He stated they can make that commitment this evening. Vice Mayor Surra stated if it is not written,it is not so. Mr.Curt Laughinghouse stated if they wanted to amend the agreement to include that,it would be fine.They feel they will be a very good neighbor,they want to be in Apache Junction and they want to meet the Apache Junction code,and they will.He showed them pictures of a project that were taken in December with trees already in place, waiting for the grass. Vice Mayor Surra asked if they were going to put grass in the subdivision. Mr.Curt Laughinghouse stated grass in Arizona would be a different story.Their budget is of good size but he does not know about putting grass in this project.He does not know the economics of it here. Vice Mayor Surra asked if this is their first desert site. Mr.Curt Laughinghouse they have a site near Santa Fe,New Mexico,which is more mountainous than desert -like. This would be their first in a desert.He added they are not afraid of meeting local codes.Their architect has done multiple dwelling units in Arizona for 10 to 15 years. Councilmember Durbala asked if they are going to be taking a specific amount of residents from Apache Junction and a specific number from Maricopa County. Mr.Curt Laughinghouse stated they would not be able to do that. Ms.Dana Belknap stated they are not marketing to snowbirds,they are providing housing that is not set aside for a specific community. Mayor Coleman stated since it is not being annexed at this time,it would end up drawing our citizens outside the community. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 13 OF 20 Ms.Dana Belknap stated that should be an incentive for them to annex the project. Mr.Curt Laughinghouse stated they have federal subsidy granted through the tax code which will not allow them to discriminate in any fashion. Mr.Jim Walker stated they will not market the units out of state,they will be marketed within the 4 to 6 mile area surrounding the project. Councilmember Insalaco stated he liked the project.They are trying to change the face and image of the community and it would be nice for Apache Junction to have a first,which he believes this is.He likes the idea of annexing them and keeping the money on this side of the line. Vice Mayor Surra asked if they would be bringing business with them;she did not think there was an area of commercial development coming with them. Councilmember Insalaco stated there is not,but businesses are taking our residents away from Apache Junction. Councilmember Durbala commented they might shop at our stores and use our medical services. Vice Mayor Surra wanted the amount of state control over the project clarified and what would happen after the 30 year covenant.She asked how much say the state would have in the running and management of the project. Mr.Curt Laughinghouse stated there is a substantial subsidy from the state to the investors and that causes the investors to put up half of that $5.6 million.There will be a private,free enterprise,$2.3 million in the project.The balance will be on a loan that is a private market loan.After they get the subsidy that permits them to reduce the rents,i t is entirely free market enterprise with 100% private money running it.They have to make it pay;pay the debt service,all the expenses and try to make some money at the end of each year.I t is not something that is built by a state or a county with a grant of $5 million from Housing and Urban Development,with no discipline on running it.The discipline is that real money is in it and it has to collect rent every month. The second thing is the covenant will be applied to the land in favor of the state and in favor of any tenant.The rents,the amenities,the 10% disabled persons commitment and more are in that covenant.They have to pay an annual fee for the state agency,the Department of Housing and Infrastructure Development,to audit their project in how they qualify their tenants and whether they meet all the covenants they promised for the next 30 years. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 14 OF 20 After 30 years,they can either sell the property or run it in a different fashion.The legislation that started this established a minimum of 15 years, most states make it into 30 years,with some going 40 or 50 years.Michigan has a place where they can check it off to be for perpetuity.The point is, this is in excess of the federal minimum.Each state has a competition for these awards,they competed with dozens of other projects and theirs was awarded through a competitive point system. Vice Mayor Surra asked what rent controls would be put into place. Mr.Curt Laughinghouse stated the area median income is determined annually by Housing and Urban Development, which for this area was determined to be $47.500.They promise that some of the units will be rented to people at 60% of that number,some at 50% and some at 40% this year.The rent is for 30% of the annual income of the renter. The rent will change with the median income,with their being a number of units at each level.He invited the city to audit them if they wished. Councilmember Urich asked how they were going to phrase this development as they usually change the name of the development from Senior Cottages of America. Mr.Curt Laughinghouse stated it would be Senior Cottages of Apache Junction. Councilmember Durbala asked if any of the rents would be subsidized by anything else other than by the given formula,such as federal or state funding. Mr.Curt Laughinghouse stated there would be no other subsidies. Councilmember Durbala gave an example of someone with about a $1200 a month income and asked if they would be able to afford to move into the project. Mr.Curt Laughinghouse stated the person probably could not rent one at the 60% level unless it was one of the apartments,but they could probably rent one at the 40% or 50% level.They will have a waiting list for all levels. Councilmember Durbala asked if he had a breakdown on the number of apartments available at all the levels. Mr.Curt Laughinghouse stated that is part of the application to the state. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 15 OF 20 Mr.Jim Walker stated it would about 25 at the 50% level,25 at the 40% level and 50 at the 60% level. Mr.Curt Laughinghouse stated in places where building conditions are high or incomes are low,they as developers have to go out and find other money,which is frequently supplied by a city or a county,and that money reduces the rents. Mr.Jim Walker clarified the levels for this project as being 21% at 40%,63% at 50% and 16% at 60%. Councilmember Eck stated he was confused over the rush on this project as he likes the process they normally have on developments,which includes planning and zoning review,a work session and having some time to educate themselves on the issue.However,he does like the project,especially for the economic purposes of the sewer district and the development fees. Mr.Jim Walker stated the reason for the short span is because they did not know it was a viable project until late October instead of mid -year as in most projects.They have a short time period because of the required carry over in which they have to get everything done.They needed to get sewer district approval before they could approach the council with this project. Vice Mayor Surra asked who was going to sell them water. Mr.Curt Laughinghouse stated they would be getting their water from Arizona Water Company. Councilmember McClain stated she could see why they got the award as it looks like a real good proposition. Mayor Coleman closed the discussion and called for a motion. Councilmember Insalaco MOVED THAT RESOLUTION NO.97-42,A RESOLUTION OF INTENTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF APACHE JUNCTION,ARIZONA,GRANTING PERMISSION TO THE SUPERSTITION MOUNTAINS COMMUNITY FACILITIES DISTRICT NO.1 TO PROVIDE SERVICE TO CERTAIN PROPERTY LOCATED OUTSIDE THE CORPORATE LIMITS OF THE CITY OF APACHE JUNCTION BE APPROVED. Councilmember Durbala SECONDED THE MOTION. VOTE:Unanimous. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 16 OF 20 The motion carried. Mayor Coleman asked if they were any more questions pertaining to the agreement. City Attorney Joel Stern stated he believed Vice Mayor Surra had a concern regarding whether or not the applicant would agree to stricter development issues. Vice Mayor Surra agreed it was the development issues. City Attorney Joel Stern asked if she wanted something that covers that. Vice Mayor Surra stated she wanted to make sure that the development would meet the standards the city would impose on any development of like nature that would be within the city limits. If this is eventually in the city limits,it should be as balanced as the other developments that are already in an annexed area. Ms.Dana Belknap stated that would be unless it was in conflict with county restrictions. Vice Mayor Surra stated she thought it unlikely that county restrictions would be greater than the city's restrictions. City Manager Curtis Shook suggested they stipulate to that. City Attorney Joel Stern agreed that would be okay. Ms.Dana Belknap stated either way would be okay;she would be happy just to add a clause and resign the agreement tomorrow. City Attorney Joel Stern commented he did not want to bring it back. City Clerk Kathleen Connelly suggested doing a floor amendment. Ms.Dana Belknap was given a suggestion from the audience to change the wording to "unless prohibited by conflicting law,developer shall comply with all ordinances,codes and regulations of the City of Apache Junction".She commented prohibited probably is not the right word since Maricopa County would probably not say SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 17 OF 20 they cannot do what Apache Junction says,they would say something different. She suggested something else. using conflicting. Councilmember McClain suggested Ms.Dana Belknap agreed that saying something like "unless Maricopa County law conflicts". Vice Mayor Surra agreed with it as long as they included development standard ordinances as well as zoning ordinances.She commented there is a difference. Councilmember Durbala commented when they did Ordinance No.940 they were told by the development services director that they were still 20 years behind the rest of the county. City Attorney Joel Stern stated the floor amendment could include somthing like,under page two,F,Development Plans,"unless in conflict with other laws,developer shall comply with all ordinances,codes,and regulations of the City of Apache Junction."He asked if that was okay with Ms.Belknap. Ms.Dana Belknap agreed it was fine. City Attorney Joel Stern asked the vice mayor if that was in line with her intent. Vice Mayor Surra stated that would be fine as long as he had it written down,as she may not remember all that he just said.She commented she would refer to his written statement. Mayor Coleman closed the discussion and called for a motion. Vice Mayor Surra MOVED THAT THE PRE- ANNEXATION AGREEMENT BETWEEN THE CITY OF APACHE JUNCTION AND SENIOR COTTAGES OF AMERICA L.L.C.BE APPROVED WITH THE AMENDMENT AS OUR CITY ATTORNEY CURRENTLY HAS WRITTEN,TO APPEAR ON PAGE TWO UNDER AGREEMENT,LETTER F, DEVELOPMENT PLANS,WHICH WOULD BE STARTING ON PAGE ONE,NUMBER ONE,(City Attorney Joel Stern inserted the balance of the motion to include the following:)UNLESS IN CONFLICT WITH OTHER LAWS,DEVELOPER SHALL DEVELOP AND COMPLY WITH ALL ORDINANCES,CODES,REGULATIONS OF THE CITY OF APACHE JUNCTION. Vice Mayor Surra added that was correct. Councilmember McClain SECONDED THE MOTION. VOTE:Unanimous. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 18 OF 20 The motion carried. Ms.Dana Belknap thanked the council for their consideration,and added that once the entity of Senior Cottages of Apache Junction is formed,they will be coming back to the council for the signing of the agreement.At this time it is still under Senior Cottages of America,so this agreement will be forthcoming but it will not be in a rush. RATIFICATION AND SETTLEMENT AGREEMENTS WITH SUPERSTITION MOUNTAINS COMMUNITY FACILITIES DISTRICT NO.1 AND MINGUS CONSTRUCTORS,ET AL. )City Attorney Joel Stern briefed the council on the item.He stated this had been discussed at various other times.They have essentially solved the litigation involving the bankruptcy; basically the claim will go away.In exchange for that,the city agreed to accept between $3,000 and $5,000 over a period of time for settlement in the Mingus litigation per month.The district will be liable for that amount.In addition,the litigation with Mingus Contractors has been settled in which Mingus will be paid $2,000 up front,the construction litigation case will be dismissed against them,and they will dismiss their tort case against the city.Any damages that are determined to be because of Mingus by a third party contractor will be capped at $125,000.In addition,they will execute all releases that are necessary.The forebearance agreement should be in front of the district tomorrow at their meeting.He requested council to ratify the agreements after he has reviewed them;these are the principles of the settlements. Mayor Coleman opened the item to discussion by the council.There being none,he called for a motion. Vice Mayor Surra MOVED THAT THE PROPOSED SETTLEMENT AGREEMENTS WITH SUPERSTITION MOUNTAINS COMMUNITY FACILITIES DISTRICT NO.1 AND MINGUS CONSTRUCTION CO.BE RATIFIED AND THAT AUTHORIZATION BE GIVEN TO THE MAYOR TO SIGN THE AGREEMENTS CONTINGENT UPON FINAL APPROVAL BY THE CITY ATTORNEY. City Attorney Joel Stern stated it should be changed to MINGUS CONTRACTORS,as it was a misprint. Councilmember McClain SECONDED THE MOTION. VOTE:Unanimous. The motion carried. ADJOURNMENT SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 19 OF 20 meeting at 9:17 p.m. ACCEPTED THIS 6TH COUNCIL OF THE CITY OF SIGNED AND ATTESTED TO ATTEST: City Clerk )Mayor Coleman adjourned the _ DAY OF JANHARY ,1998,BY THE MAYOR AND CITY APACHE JUNCTION,ARIZONA. THIS 6TH DAY OF JANUARY ,1998. DOUG Mayor CITY COUNCIL MINUTES CERTIFICATION EMAN I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the special meeting of the City Council of the City of Apache Junction,Arizona,held on the 10th day of December,1997.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 15th day of December,1997. SPECIAL MEETING OF THE CITY COUNCIL DECEMBER 10,1997 PAGE 20 OF 20