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NG, Trophy Lake Estates developer compromise, then move forward

June 23, 2008

By Ivan Raconteur

Staff Writer

Design of the Trophy Lake Estates development in New Germany came to a screeching halt last week, then proceeded slowly, incorporating elements from a much earlier design phase.

The estimated $2.4 million in assessments was a deal-breaker, developers said, and to reduce costs, the project has gone back to a private, pressurized sewer system that uses grinder pumps in each of the 60 homes in the project.

“We have a lot of experience with these systems. It is the most efficient and effective system for a low-density project,” Trophy Lake Estates representative Hannah Shirkey said.

City staff members previously indicated that they hated the idea, but the city needs the development to pay for infrastructure improvements that have already been made, and compromise won the day.

After meeting with Trophy Lake developer Grant Hustad and Shirkey, City Engineer Sheila Krohse drafted two new options for the sewer system, which she presented to the city council Tuesday.

The result will lower assessments for the project to about $1.1 million, and reduce the total cost of the project from $2.8 million to about $1.5 million.

Krohse said the second option would be better for the city in the short-term, because it would provide cash flow to help pay for the city’s new well and water tower, but Shirkey said she and Hustad strongly favored the first option.

The issue, she said, was value of the lots, as well as a concern that potential buyers would balk at paying assessments up front before they are ready to build.

The second option would have required payment of water trunk charges at the time lots were purchased from Trophy Lake Estates. Sanitary sewer trunk charges would have been payable at the time lot owners applied for building permits.

The council approved the first option, which includes:

• trunk sewer and sanitary sewer construction from Black Forest Estates to the west access of Trophy Lake Estates.

• reconstruction of 62nd Street from County Road 33 to the west access of Trophy Lake Estates, and gravel restoration on 62nd Street east of County Road 33.

• bituminous overlay of 62nd Street from the west access of Trophy Lake Estates to the west boundary of the property.

• grinder pump and pressurized sanitary sewer and water systems within the development to be owned, operated, and maintained by the homeowners’ association.

The estimated assessment to Trophy Lake Estates will be $1,101,929. The total estimated project cost will be $1,475,322.

City Attorney Dave Hubert said another issue the city needs to consider is the form of security that the developers would provide to ensure that the city can make bond payments for the sewer and water improvements.

“The usual way to do that is for the developer to get a letter of credit at the bank. The city can draw on it if necessary. It is not cheap (for the developer), it is expensive, but it is best for the city,” Hubert said.

He added that Hustad does not want to provide a letter of credit, and wants to instead provide a bond, which Hubert said is more like an insurance policy. The problem, he said, is that a bond is much more difficult for the city to enforce and collect on than a letter of credit.

The bond required will be equal to about 50 percent of the value of the assessments for the project.

Krohse said Hustad has also talked about providing a cash down payment of about $20,000 that the city could draw from if necessary.

The council expressed concern about the developer providing adequate security, noting that it is responsible for protecting the interests of city residents.

“When we talk about the city, we are talking about men and women, and some of them are in hard times already. They don’t need any more risk put on them,” Mayor Pete Pederson commented.

“There is definitely a risk to the city. We are sharing that risk with Trophy Lake Estates,” Krohse said.

Hubert told the council if it was comfortable with the concept of accepting a bond, he would review the situation.

The council also asked him for input regarding the amount of a cash down payment it should require. Shirkey suggested something in the range of $15,000 to $20,000, but Council Member Steve VanLith said he would be more comfortable with an amount of $30,000 to $40,000.

The council will have to give final approval to these items when it considers the developer’s agreement for the project.

Odds and ends

In other business, the council:

• heard from Krohse that the new water tower is expected to be filled tomorrow.

• authorized purchase of forks for the city’s Bobcat at a cost of $695.

• heard from City Clerk Joan Guthmiller that Waste Management charged the city $20 each for mattresses that were dropped off during the city’s cleanup day. The city was not charged for these items in the past. Guthmiller said the city is due to re-negotiate a three-year contract with the company next summer.

• heard from Carver County Sheriff’s Department liaison officer Chris Nelson that he has received more complaints about loud music at the Hook ‘n Ladder bar. Nelson recommended that the city review the City of Mayer’s noise ordinance and consider adopting its own noise ordinance so deputies will have something they can enforce.

• conducted a public hearing regarding Mayer resident Michael Thaemert’s purchase of the T-Road Tavern effective Tuesday, July 1. No comments were received from the public, and the council approved Thaemert’s liquor license.

• acknowledged Chip Purcell for his time on the city council. Purcell recently resigned because he is moving out of the city.

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