Committee of the Whole

COMMITTEE OF THE WHOLE November 29, 2017 Page 1 Members Present: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky Members Absent: Barney (Mayor) To the Honorable Mayor and All Aldermen: Following are the recommendations of the Committee of the Whole meeting called to order at 4:15 p.m. on November 29, 2017: 1. The City Council approve the final payment of $1,960.00 to Dig It Up Backhoe Service for 2017 Nuisance Abatement. (4274) ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 2. The City Council approve the final payment of $25,076.39 be paid to Bechtold Paving, Inc. for 16th Street and 31st Ave SW Intersection Improvements. (4125) ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 3. The City Council approve the final payment of $483,737.77 be paid to ASTECH Corporation for 2017 Street Seal District. (4246) ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 4. The City Council pass an ordinance adopting the 2017 National Electrical Code (NEC). ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 5. The City Council concur with NDDOT to accept the bid by Bechtold Paving Inc. of Minot in the amount of $4,210,195.32 for US2-42nd St Intersection Improvements. (4181) ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 6. The City Council reject bids and authorize Public Works to rebid the Landfill Dozer. (4302) ********** CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 2 The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 7. The City Council award the bid to Swanston Equipment in the amount of $175,900 for the used Global M3 street sweeper. (4307) ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 8. The City Council pass an ordinance codifying license suspension penalties relating to alcoholic beverage licenses in Chapter 5, Section 32 of the City of Minot Code of Ordinances. ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 9. The City Council approve the amendment to the EAPC contract for the CDBG-NDR HUD approved activity called the Design Book. ********** The above motion by Alderman Sipma, seconded by Alderman Podrygula, and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky. nays: none. 10. The City Council approve the final payment of $50,304.12 be paid to Bechtold Paving, Inc. for 2017 Street Patching. (4244) ********** The above motion by Alderman Wolsky, seconded by Alderman Straight. Upon questioning by Alderman Wolsky, the Assistant City Engineer explained, the cost estimate is based on the prices from the previous year but we have seen an improvement in prices for construction activities over that past couple years. The design quotes are an estimation based on the number and quantity of patching throughout the city in addition to information provided by Public Works on what might be necessary. The final price is less than the estimate because of better pricing and less work completed. Whereupon a vote was taken on the motion by Alderman Wolsky, seconded by Alderman Straight and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. 11. The City Council pass an ordinance to amend the 2017 annual budget to increase building inspection education and training for the purchase and sale of codebooks. ********** The above motion by Alderman Wolsky, seconded by Alderman Sipma. Alderman Wolsky asked the Building Official to explain if these code books are issued on a regular basis and what the circumstances were around this request. CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 3 Mitch Flanagan responded by saying, there was a seminar that took place to update the mechanical contractor to the building codes. It was included as part of the 2015 update that was adopted a couple years ago. Some of the contractors did not have codebooks so the City sold the books to them at the City’s cost. He concluded by saying, the updates to these codes takes place every three years. Whereupon a vote was taken on the motion by Alderman Wolsky, seconded by Alderman Sipma and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. 12. The City Council approve the plans and specifications for WWTF Hydraulic Improvements project and authorize a call for bids. (4202) ********** The above motion by Alderman Olson, seconded by Alderman Straight. Alderman Wolsky said he was unable to find the date this contract was initially approved by City Council and asked for the termination point of the RFQ. Mr. Jonasson stated, this project has been off and on over the past few years as a result of budget constraints. He said, they typically do a Request For Qualifications every three years so it will likely take place next year. This particular project was broken down and pieced out so it made sense to keep one engineering firm throughout the duration of the project. Alderman Wolsky expressed his concerns about Apex Engineering. Whereupon a vote was taken on the motion by Alderman Olson, seconded by Alderman Straight and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. 13. The City Council approve the reassignment of FBO lease from Minot Aero Center to Avflight and authorize the Mayor to sign the agreement. ********** The above motion by Alderman Sipma, seconded by Alderman Olson. The Airport Director explained that Minot Aero Center is owned by Warren Pietsch and Brian Sturm. They have come to an agreement with Avflight to sell the business. It was brought to the Airport Director’s attention in September. He said the process is such that they are allowed to assign their lease to Avflight with little input from the Airport if it will stand as is. If there are substantial changes, it opens the opportunity for some negotiations. While Minot Aero Center is selling to Avflight, Avflight is going to subcontract the maintenance and flight instruction portion of the business to Mr. Pietsch and Mr. Sturm which will remain local. Carl Muhs and Garrett Hain, from Avflight were present at the meeting for any questions. Mr. Muhs, President of Avflight, came forward to introduce himself. He said they are a Michigan based, family owned organization. The parent company is called Avfuel Corporation which is one of the largest aviation CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 4 service companies in the world. They handle everything from military, airline fueling, Fixed Base Operator, an in house insurance company and a truck fabrication plant. The Avflight division has 19 retail outlets with 500+ employees in 19 cities across North America and two in the United Kingdom. They offer a number of services that suit Minot and they train employees in all areas of airfield services. Mr. Muhs responded to questions by saying, Minot is a good location to build on current services such as tech stops where flights can come from other regions of the world. He said they work with Aircraft manufacturers like Boeing, Embraer, and Airbus and they do certification and training in three of Avflight’s current locations. There could be potential to bring those activities to Minot as well. Alderman Podrygula mentioned, he sees the Airport as a tremendous resource. The Airport is the gateway to this region and he believes it is an underappreciated resource. He said he hopes there are many opportunities to engage in business. Whereupon a vote was taken on the above motion by Alderman Sipma, seconded by Alderman Olson and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. 14. The City Council award the bid for a lease on two new sanitation trucks to Sanitation Products in the amount of $66,916.00 for the tandem axle dual arm truck and $48,025.00 for the single axle truck. ********** The above motion by Alderman Olson, seconded by Alderman Straight. Alderman Wolsky questioned whether the purchase of additional sanitation trucks should wait until after the Council reviews the garbage collection ordinance. He believes the City is making a purchase based on a policy that does not yet exist. Alderman Wolsky moved to table the award of bid for a lease on two new sanitation trucks to Sanitation Products in the amount of $66,916.00 for the tandem axle dual arm truck and $48,025.00 for the single axle truck. Motion seconded by Alderman Podrygula. Alderman Wolsky continued by saying, the amendments to the garbage collection ordinance were implemented quickly due to automation but they have not yet discussed the section regarding taking over the accounts of four-plexes. The Public Works Director explained, there are two trucks identified in the proposed bid award and both are necessary regardless of any changes to the ordinance. After implementing automated collection, it became evident that the collection routes could not be completed with only five trucks and the sixth truck that was intended to be a spare is now used regularly. One of the trucks in this request is for a backup because the recommendations from other cities underestimated the number of trucks it would take to complete the work. He then explained, the other truck is smaller and lighter and is necessary for collection in areas that cannot be accessed such as steep hills, small alleys and culls de sac. It can also be used on streets that are not built to City standards. He added, equipment takes a long time to order and if this is approved now, the trucks will be delivered in June. CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 5 Alderman Jantzer asked if the backup is necessary since the trucks are all new and should have little incidence of downtime. Mr. Jonasson responded by saying, there is still regular maintenance and oil changes that needs to take place and accidents happen. It would cause delays to operations if a truck is in an accident and needs time for repairs. Whereupon a vote was taken on the above motion by Alderman Wolsky, seconded by Alderman Podrygula and failed by the following roll call vote: ayes: Straight, Wolsky; nays: Jantzer, Olson, Podrygula, Sipma. Alderman Podrygula stated, it is good planning to have a spare and Mr. Jonasson confirmed, the City has had spares in the past. Alderman Straight said, it is a difference in opinion whether we need the other truck. Alderman Straight moved to split the question. Motion seconded by Alderman Wolsky. Upon questioning by Alderman Podrygula, Mr. Jonasson stated, the lighter truck is still needed even if the City does not acquire additional accounts. It will be used to remain efficient since there have been cuts in staff. This equipment can be operated by one person rather than two. Whereupon a vote was taken on the above motion by Alderman Straight, seconded by Alderman Wolsky and failed by the following roll call vote: ayes: Wolsky; nays: Jantzer, Olson, Podrygula, Sipma, Straight. Alderman Olson stated, on a broader issue, there are qualified staff who spend time researching information in order to bring recommendations to the Council. She said, they are experts in their field and as a person without expertise in Public Works and Sanitation, she relies on what the Public Works Director says, so when he makes a recommendation, she plans to follow it. Whereupon a vote was taken on the original motion by Alderman Olson, seconded by Alderman Straight and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight; nays: Wolsky 15. The City Council approve the transfer of $4,300 from the Library's account to Project LIB031 (210-00-00-369.03-00) and pass an ordinance to amend the 2017 budget to increase the Library's budget for the purchase of a 3D printer, supplies and training. ********** The above motion by Alderman Olson, seconded by Alderman Wolsky. Alderman Wolsky called attention to the fact the Library is getting a 3D printer. The Library Director said the plan is to keep it in the Maker Space and it will be available for use by the public. She also mentioned the standard filament it requires to print has come down in price quite a bit. They have not worked out all the details yet such as, the cost or if printing will require a Library card. Whereupon a vote was taken on the above motion by Alderman Olson, seconded by Alderman Wolsky and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 6 16. Information for the Committee and Council on the improvements at the Minot Water Treatment plant being bid by NAWS/SWC. ********** Alderman Wolsky asked the Public Works Director if there was any consideration given to moving the water treatment operation to Max rather than here in Minot. Mr. Jonasson responded by saying, it was looked at several times in the first, second, third, and fourth iteration of the EIS and SEIS that have gone through. Some of the issues deal with what is referred to as the biota plant, the treatment facility at Max, which is not 100% full treatment facility. Filtration, UV treatment, and chloramines are added to the water there and then it is piped to Minot where this facility will blend it with water from our aquifers as outlined in the EIS, and then it will receive a finished treatment with including softening and other techniques. One of the options considered, was to pipe the water directly to Minot which is when the lawsuits started because of the raw water transfer over the continental divide. They also looked at doing full treatment at Max however, if something happened to the pipeline over the stretch between Max and Minot, the city would be out of water. After all of the discussions, they felt it was best to keep the plant here in Minot since we have the backup water sources. 17. The City Council award Towing Services to Ole Olson's Towing and Recovery and authorize the Chief of Police to sign contract. ********** The above motion by Alderman Sipma, seconded by Alderman Wolsky. Alderman Wolsky thanked the Police Chief for his professional response to an email from Mr. Peterson, one of the bidders. At the request of Alderman Podrygula, Chief Olson summarized his explanation regarding the bid proposals. He was accused by Mr. Peterson, of showing favoritism toward the recommended bid so the Police Chief clarified, he has no relationship to Ole Olson’s Towing Service through family or through a social friendship. He demonstrated no favoritism whatsoever and he provided his rationale for the recommendation in the documentation provided to the Council. The proposals were dissected and analyzed and he chose the most qualified proposal for his recommendation. Upon questioning by the Committee, Chief Olson said, it was difficult compare the proposals because they were not an apples to apples comparison. One gave an hourly rate whereas the other gave a flat rate. He also had to meet with the company to clarify certain aspects of their bid. The recommended bidder gave a significantly lower bid for the most common type of tow, among other capabilities. The contract will be negotiated for up to three years. Whereupon a vote was taken on the above motion by Alderman Sipma, seconded by Alderman Wolsky and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 7 18. The City Council deny the 2015 abatement request on the Walmart Store property at 3900 South Broadway. ********** The applicant, Kendric Olson with Paradigm Tax Group, requested to appear via Skype to discuss the abatement request for the Walmart Store property at 3900 South Broadway. Alderman Podrygula spoke against the procedure and commented that if someone wants the Council to consider their request, they should make themselves available for the meeting. Mr. Ternes clarified, he asked permission to use Skype due to the time constraints surrounding the request. When the appeal was filed, a 60 day clock started and the Council didn’t have any meetings scheduled in December in order to meet the deadline. He visited with the City Attorney and Council President about the issue before agreeing to conduct the discussion through Skype. The City Assessor stated, Walmart has applied for appeals throughout North Dakota. It is a matter of methodology that the assessors disagree on which is why there is a dispute between values. They are requesting a significant reduction in value from $18,722,000 to $9,344,100, which is about a 50% reduction. Kendric Olson, a consultant for the Paradigm Tax Group, said he has been commissioned by Walmart to represent them in this matter. He continued by saying, the Minot store was built in 2006, is roughly 207,000 square feet and is situated on 21.35 acres of land. The 2015 assessed value is $18.722 million or $90 per square foot. He described the three accepted approaches to valuation, the income approach, the cost approach and the sales comparison approach. He said, the income approach is essentially, how much rent a property could generate. There is no data available to support this approach for this property. The cost approach asks what it costs to build, which is useful for new buildings but is an inappropriate measure since this store was built in 2006. If the cost approach was used, it would have to factor in depreciation as measured by sales. It is difficult to calculate a value using the sales comparison approach because there is not a perfect set of data. There aren’t a lot of big box stores in North Dakota so he said he had to expand his search to find comparable sales. In the Upper Midwest region big box stores sell for around $30-$32 per square foot. The Home Depot in Bismarck which is 102,000 square feet, sold for $5.8 million in 2008 but sat vacant until it sold at auction in 2010 for $34 per square foot. The assessed value was more than twice the actual selling price. NDCC requires the assessor to take into account the property’s earning capacity, the market value and all other manners that affect the actual value of the property to be assessed. Using the sales of comparable big box stores are appropriate as a generally accepted appraisal principle. He concluded by saying, the Assessor’s valuation is not supported by any of the three approaches to valuation. The submitted valuation of $45 per foot is reasonable. The City Assessor responded by saying, there’s a difference in methodology and although he respects what Mr. Olson is indicating, if sales are used as a comparison, then they should be sales from North Dakota. He mentioned the sale of Kohl’s in Minot and other sales in Fargo. He listed concerns surrounding the sales Mr. Olson used to calculate the value particularly that we don’t know the situations CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 8 around the sales, including the age of the building or the land value compared to the total value. He said it is difficult to quantify a value based on a hypothetical assumption of a price after a building is no longer operating under its highest and best use. Based on the cost approach, the City Assessor estimated, this building already has a discount of about 30%. He said, he understands this is a big building and the market may be smaller for a building this size but the value they are requesting goes beyond a reasonable request. He stated, the request is for a total assessment of about $9 million but the City has the land valued at $6 million which means the building would only be worth about $3 million which is 85% less than the current estimated price if it was built new now. He said it is hard to believe a building that is only 12 years old has no more value than 15% of the cost to build. Big box stores can expect a life of at least 50 years. He reminded the Committee, this 2015 assessment is based on the pricing from 2014 and the assessment value for 2017 has already been reduced based on added age and a slowing commercial market since 2015. From his experience, he has not seen a tax representative question the land value of a property and he is confident in the value assessed to the land. He said, right now the value is assessed at $85 per square foot. He listed the assessed values of similar big box stores in Minot including Target at $85 per square foot, Kohl’s at $112 per square foot, Home Depot at $116 per square foot, Hobby Lobby at $82 per square foot and Kmart which was built in 1969 at $57 per square foot. The value on the Walmart store is in line with all of the other stores in Minot and he does not believe it is fair to allow a 50% reduction on this assessment. Mr. Olson requested the documentation that was provided to the City Council. Upon questioning by Mr. Olson, Mr. Ternes said they use the cost approach in a model called the Vanguard appraisal system which is used in nine different states. They start with a replacement cost table which was built in 2008 and do the best they can to calibrate the model here in Minot every year. He said he would provide the document to Mr. Olson which is within state tolerance. It is composed of all sales including apartments, metal storage buildings and retail stores etc. These sales are used from year to year to adjust the depreciation model if needed.. The replacement cost table used for Walmart is used for all larger retail stores with deductions given for age. Mr. Olson mentioned that if he were to take the value of $18 million and deduct the land value of $6 million, would be left with $12.67 million but if we take out depreciation have $5.4 million for the building which totals $11.5 million when added back to the land value. If the cost approach is reconciled with the sales approach, the data says it is in the $10 million range. Alderman Sipma moved the Committee deny the 2015 abatement request on the Walmart Store property at 3900 South Broadway and affirm the recommendation from staff. Motion seconded by Alderman Straight. Alderman Sipma commented that looking at comparable properties throughout the height of the oil boom the valuations are accurately reflected in the assessment. He does not agree that the value could go from $18 million to $9 million over such a short period. Alderman Podrygula said, when looking at comparable assessments, the appraisal looks to be in line with other big box buildings. CITY OF MINOT COMMITTEE OF THE WHOLE November 29, 2017 Page 9 The Assessor stated, they use their model and compare 30 commercial sales from the state tax department. According to state statute, when those 30 sales indicate the values are at a certain ratio of uniformity above or below 90% to 100%, the assessors are required to raise or lower current assessments so the aggregate commercial totals are within 90% to 100%. The Walmart property for 2017 actually went down because a variety of occupancies that were commercial sold for a little more than the 100% assessment level because of the downturn in 2017. Whereupon a vote was taken on the above motion by Alderman Sipma, seconded by Alderman Straight and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Straight, Wolsky; nays: none. There being no further business, the meeting was adjourned at 5:32 pm. Respectfully Submitted, Kelly Matalka, City Clerk CITY OF MINOT