Delano continues discussion on extending utilities into Independence for big box development

October 6, 2008

By Ryan Gueningsman
Managing Editor

DELANO, MN – Discussions will continue between the City of Delano, City of Independence, and Ryan Companies regarding a potential development that is in Independence and borders Delano.

At a special Delano City Council work session Tuesday night, members of the council met with Ryan Companies representative Tony Barranco regarding progress of the project.

Ryan Companies has proposed a plan to commercially develop a 30-acre area at the northeast corner of Highway 12 and County Line Road in Independence. Though Barranco would not specify the name of any particular retailer, Delano officials noted several times the retailer Target could be the anchor of the project. The Target name was also brought up at meetings with the City of Independence.

The City of Independence has accepted this application, and is in the process of requesting a comprehensive land use change from the Metropolitan Council to allow for commercial development at both the northeast and southeast corners of this intersection.

One of the main issues with the project is Independence’s inability to service the area with sanitary sewer and water utilities.

Because of this, and because of its proximity to Delano, information was given by Delano officials to Independence and Ryan Companies about the possibility of servicing a limited area in Independence. It was noted in a memo from Delano City Administrator Phil Kern that “such extraterritorial service would need to be done within the framework of a utility sharing agreement that outlined the terms of the city’s service.”

Six key points were brought up by Kern for discussion Tuesday night, with him noting that water and sewer would be available from the area of the intersection of St. Peter Avenue and County Line Road. Kern said it would be the developer’s responsibility to access the utilities, construct them throughout the site in accordance with Delano’s standards, and provide Delano with easements throughout the site to service and maintain those utilities in the future.

He said the developer is also in agreement with paying all of the city’s applicable fees. Another part of the discussion noted Delano would be able to operate its facilities independent of metropolitan sewer and water regulatory districts, and may also charge an additional fee reflecting the additional burden of servicing an area outside of its jurisdiction.

“Obviously, we planned our network of infrastructure to service our boundary, and a potential growth area to the south and west,” Kern said. “There would be potential long-term costs to us if we’re providing utilities further to the east that we haven’t planned on.”

Kern noted the project extends not only beyond city boundaries, but also county lines, and also reaches into area governed by the Metropolitan Council. He said, much like Rockford and Hanover, officials from Delano would want to have independent authority to run the wastewater plant and its own water infrastructure, even though they are servicing part of the Met Council. He said this is something that has not yet been confirmed and needs further discussion on.

In addition to the on-site sewer and water that would need to be constructed, Kern said the city also is asking all infrastructure required for the project, including potential adjacent upgrades to County Line Road, St. Peter Avenue, and a traffic signal at that intersection, be done at no cost to the City of Delano. Kern said the developer indicated it would pick up those costs. It was noted that St. Peter Avenue/County Line Road intersection would be the main entrance into the shopping center.

Touching more on the issue of County Line Road itself, it was noted by Kern the road north of Highway 12 is a county road and has shared maintenance costs by both Wright and Hennepin counties. South of Highway 12, the road is still called County Line Road, but is actually a local road.

“Technically speaking, the City of Delano and the City of Independence have mutual joint jurisdiction of that road to the south,” Kern said. “As part of this agreement, we want to maintain that Independence would be responsible for 50 percent of the costs of maintaining, upgrading, snowplowing, seal coating, whatever it is that takes place on that road south.”

Kern said right now, Delano has been bearing most, if not all, of the costs of plowing and maintaining that road because of its Maplewood Estates and Woods Creek developments feeding much of the traffic onto that roadway.

It was noted this was brought up at a recent meeting between Delano and Independence officials, and there was no disagreement by those present to split the maintenance costs of the road, but that final decisions must by made by the full city council.

The third point Kern brought up was that, if this were a development taking place in Delano, there would be the normal review of site and architectural guidelines for the area, as well as meetings by the park board, planning commission, city council, and public hearings.

“That will all happen with this, but it will happen in the City of Independence because it’s their property and they maintain all of the zoning,” Kern said, noting Delano has asked to be able to review the site development guidelines and architectural components. Kern brought up that Ryan Companies would like to avoid going through two different zoning review processes, which members of the Delano City Council felt made sense.

“It is in our backyard,” commented Mayor Joe McDonald. “It will be perceived as a Delano project, even though it is in Independence.”

The fourth main point discussed was that there is concern about additional development that may take place around a big box store. Kern said once something like this locates in a community, other retailers want to be near it because it is what is drawing people to the area.

He said one of Delano city staff’s concerns is that land already in Delano along the Highway 12 corridor that is hoped for future commercial development may be jeopardized.

“One of our concerns was, that providing the utilities and allowing this commercial development to take place to the east, it would seem pretty natural that some of the market incentives would want to be to keep filling in the rest of the land around it, and it would probably lend itself to wanting to continue commercial development to the east rather than necessarily coming west,” Kern said.

At the recent meeting with Independence officials, Kern said, from their city council’s standpoint, they shared it’s not their intent to continue development that way.

“They’re doing this to provide a need within the community, to hopefully generate some jobs, provide some tax base, and to provide a little commercial development on the west side of their boundary, but they didn’t necessarily have any interest in going further to the east,” Kern said, noting this is probably one of the most significant issues with regard to the project, and that the city has gone so far as to request Independence not allow commercial development to the east, at least to a point to be determined such as Copeland Road or Hennepin County Road 92.

“We want to try and restrict that in some fashion,” he said. It was noted that in the future it seems logical utilities will continue to work west toward the project, and at some point meet up. Kern said, at that point, Delano doesn’t have much of a say in the issue. He said the city is asking Independence to put in its code that the city does not allow any unsewered commercial development in this area.

It was noted that, with changes in elected and appointed officials, the city code could change, and something that was agreed up could be amended. In the event this would happen, Delano would ask that Independence compensate an amount equal to 100 percent of the taxes on all sewered development area.

The fifth item looked at pertains to the growth in the 30 acres of land itself on the northeast corner, as well as the additional 30 on the southeast corner. Kern said Delano city officials would like to see a phased time period for the development of the south 30 acres, such as five years.

“Obviously, the folks who have invested in our community have commercial space available,” Kern said. “Some of those spaces are open, so one of the things we have a concern about is flooding the market with more and more and more commercial space, thus causing more stress on the folks that we do have in town already.”

The sixth issue, cited as the “hotbutton issue” stems around a reimbursement for services provided to the development area.

“We (Delano) obviously feel that we are providing a service. We’re providing services that make this development possible, and so we’ve asked Independence for some type of compensation for providing the services to this site,” Kern said.

He said this site, from a stormwater perspective, drains down through Delano and into the infrastructure the city maintains. He said there are other issues that will also affect Delano if this project goes through, including increased traffic, resulting in additional traffic enforcement and the potential for accidents and possible increased crime statistics, as well as additional road maintenance and things of that nature.

The length of time Delano would be compensated any amount was also discussed. It was noted Delano would be providing service indefinitely, therefore the reimbursement for services should also be long-term.

The percentage of tax revenue, as well as the time period it would be paid to Delano, was discussed by the council, with Independence offering an amount equal to 20 percent of the tax revenue for a 10-year period.

At the joint meeting between the two entities, those present discussed anywhere between 20 and 40 percent for a period of 20 or 30 years. He said no formal conclusion was reached amongst the committee at that meeting regarding the amount or time period. Kern said Independence City Council recently met, and directed its staff to represent back that it would offer 20 percent of the revenues for a 10-year period. He said this differs greatly from 40 percent over a 30-year period on the high end.

Kern said an estimate of the dollar amounts is hard to figure, but said Delano could get $15,000 to $20,000 a year from utility fees – the monthly sewer and water fees that may come from this type of project.

“Conversely, for tax revenue, a site like this would generate on the Independence side, pretty conservatively, about $80,000 in local property tax revenue,” Kern said.

Twenty percent of $80,000 is $16,000 and forty percent would be $32,000, which leads to a difference $16,000 a year with a time period of anywhere from 10 to 30 years.

Kern said the meetings between Independence, Delano, and Ryan Companies have been “very cordial,” and said most of these issues appear to be non-controversial between the two cities.

“The project will ultimately have impacts on Delano, both in beneficial and costly ways,” Kern said. “The compensation of services appears to be a significant point of disagreement, and one that ultimately could have a bearing on whether or not this project proceeds.”

Local developer Will Haack asked Barranco how committed the big box is to the project, which Barranco responded it is very committed to the project. Asked about a timeline for a project, Barranco said if things go well, there could be construction in 2010 with an opening for spring 2011.

Haack also commented on several sites located in Delano that would allow Delano to get 100 percent of the tax revenue from the project, rather than the offered 20 percent from Independence. Barranco noted several sites around Delano were looked at, but none were suitable for his anchor store.

Following more discussion, a difference in opinion was shared between Kern and Barranco about the stormwater runoff and the impacts it would have on Delano, but a short time later, Barranco said Kern has been “a great ambassador to protect Delano.”

Barranco also admitted he was surprised Independence has been as flexible as it has with some of the conditions of the project.

Moving forward, Kern said there have not been additional meetings scheduled with representatives from each entity, but said he will get back to the City of Independence and continue discussions on the project. It is likely another meeting will be set in the next few weeks.

City Council Member Brad Hotchkiss also said he wanted to make sure there is an open forum on this issue where residents can provide input on it.

The Independence Planning Commission will conduct a public hearing Monday, Oct. 13, on the request from Ryan Companies at 7:30 p.m. at Independence City Hall.

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