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HomeMy WebLinkAbout93-43 - ADMIN Resolution - City Council - 1993/03/03FROM POPHAM HAIK MPLS.#:2 R 4.23.1aa3 15:20 P. 5 RESOLUTION NO. 93-43 RESOLUTION RELATING TO AUTHORIZING AN AGREEMENT TO DEFER SPECIAL ASSESSMENTS WHEREAS, the City Council (the "City Council') of the City of St. Louis Park, Minnesota (the 'City") has considered and discussed a proposed Agreement to Defer Special Assessments (the "Agreement') by and between the City and Iry and Ruth Schloff; NOW, THEREFORE, BE IT RESOLVED by the City Council as follows: 1. The Mayor and the City Manager are each hereby authorized and are hereby directed to execute the Agreement„ which shall be in the form attached hereto as Exhibit A. A11 of the provisions of the Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. 2. This resolution shall become effective immediately upon its passage and without publication. Adopted this 3rd day of May, 1993. ATTEST: Reviewed for administration: Approved as to form and execution: ,1.40.14. ea Oa Cit Manager City Attorney 3 q3 c , 3ot"— 11511JRS POPHAM, HAIK, SCHNOBRICH & KAUFMAN, LTD SUITE 3300 222 SOUTH NINTH STREET MINNEAPOLIS, MN 55402 TO - 15'Zc t 7 -(00a56, - FROM JANNA/SEVERANCE 334/ -.276/ 612-333-4800 DATE OS -/ti - S�- 1 Ftr (704-. .11461.4.1-1t - �CM �Cc vin Owc�lv�r�� 51fre C � I� r • • AGREEMENT TO DEFER SPECIAL ASSESSMENTS THIS AGREEMENT dated r 3 d , 1993, is executed by Iry Schloff and Ruth Schloff ("Schloffs") and the City of St. Louis Park ("City"). WHEREAS, Schloffs own a parcel of real estate located at 3938 Meadowbrook Road, St. Louis Park, MN ("Property"); and WHEREAS, the Minnesota Pollution Control Agency ("MPCA") determined in 1989 that the property was contaminated by certain chemicals which would require clean-up activities to be performed at the Property's location; and WHEREAS, in compliance with MPCA orders, the Schloffs began incurring cost in May 1989 toward the clean-up of the contamination on the Property; and WHEREAS, as part of the clean-up operation for the Property, the MPCA ordered the Schloffs to install a pumping system whereby ground water was removed from the Property and discharged into the sanitary sewer system of the City; and WHEREAS, the discharge of the water into the sanitary sewer system resulted in sewer charges against the Property; and WHEREAS, the sewer charge was determined to be repaid to the City through a special assessment against the Property in the amount of $18,504.43 ("Special Assessment") to be paid with the real estate taxes payable in 1992; and WHEREAS, the Schloffs incurred in excess of $300,000 of costs associated with the clean-up of the Property through June 1991, and the amount of these costs exhausted the financial resources of the Schloffs such that the MPCA took over all responsibility for clean-up cost after that time pursuant to the State of Minnesota Super Fund legislation; and • WHEREAS, the assessor has placed an assessed value on the property for January 2, 1988, 1989, 1990, and 1991 in the amounts of $776,800, $800,000, $815,900, and $815,900 respectively; and WHEREAS, Schloffs, through Daniel J. Biersdorf and Associates, P.A. ("Law Firm"), have filed petitions with the Tax Court for each of these valuation dates (Court File Nos. TC - 8669, TC -9661, TC -12623, and TC -15601 ("Tax Petitions")) contending that the true value for tax purposes should be substantially less than the amounts assessed by the assessor; and WHEREAS, the Law Firm is performing its services for Schloffs on a contingent fee arrangement equal to one-third of tax savings generated; and WHEREAS, the assessor has already made an offer which would result in a combined tax refund of $42,000 for the 1988, 1989, and 1990 values; and WHEREAS, the Schloffs have not accepted that offer only because they believe the true market value for tax purposes should result in refunds for those years in a substantially greater amount than has been currently offered; and WHEREAS, the tax petition which Schloffs filed for the 1991 value for taxes payable in 1992 was dismissed for non-payment of the taxes which were due; and WHEREAS, the Tax Court issued an Order whereby Schloffs are only required to pay $5,000 of the current $42,000 real estate tax bill plus one half of the Special Assessment by May 15, 1993, in order to reinstate the petition for the 1991 value and allow for a final adjudication of value substantially less than the existing value established by the assessor; and WHEREAS, the Schloffs are able to obtain sufficient funds to pay the $5,000 ordered by the court in order to reinstate the petition for the 1991 value but lack sufficient funds to pay the Special Assessment; and WHEREAS, the City is willing to defer the due date for the Special Assessment so that the Schloffs can obtain a reinstatement of the petition for the 1991 value by paying only the $5,000 in reduced real estate taxes as ordered by the Tax Court. NOW THEREFORE, in consideration of the foregoing recitals, the mutual promises contained herein and other good and valuable consideration, the Schloffs and the City hereby agree as follows: 1. The City will allow payment of the Special Assessment to be deferred and the due date extended until first date of receipt of a refund check or checks from Hennepin County, issued pursuant to the Tax Petitions (the "Refund Check" or "Refund Checks"). 2. Schloffs agree to endorse each Refund Check they receive from the Tax Petitions immediately upon receipt and deliver it to the Law Firm for deposit in its trust account. 3. The Law Firm agrees to disburse to the City from its trust account two thirds of each Refund Check until the Special Assessment, plus interest accrued at the rate of ten percent per annum from May 15, 1993, through the date immediately preceding the date of payment, plus an amount equal to costs and expenses incurred by the City, as provided in paragraph 6 hereof, is paid in full. 4. In the event insufficient funds are generated by the refunds from the Tax Petitions to pay the Special Assessment, plus interest and penalties, in full, the balance shall be due and payable with the next due installment of real estate taxes, with interest continuing on such unpaid balance at the above -stated rate and applicable penalties, until paid in full. The penalties and interest shall be determined as provided by law and by the resolution of the City adopting the Special Assessment. 5. This Agreement is contingent upon the petition for taxes payable in 1992 being reinstated by the Tax Court. If the petition for the 1991 value for taxes payable in 1992 is not reinstated for any reason by the earlier of July 15, 1993, and the date set for trial on any of the above -referenced tax petitions, this agreement shall become null and void, and there shall be no deferral of the due date of the Special Assessment pursuant hereto. 6. The Schloffs hereby agree to pay all costs and expenses, not to exceed $1,000, incurred by the City in connection with the negotiation, review, execution and implementation of this agreement, including without limitation attorneys' fees, immediately upon receipt of a statement or statements of such amounts. Payment Dated: shall be made to the City or to the service provider, as directed by the City. If any such costs and expenses are unpaid as of the date of disbursement of funds by the Law Firm in payment of the Special Assessment, the Law Firm agrees that the amount of the disbursement to the City shall be i ewased to pay all such / outstanding costs and expenses. 7,2 3'9 /%-3� Iry Schl C Ru Schloff CITY OF ST. LOUIS PARK The Law Firm hereby agrees that Paragraph 3 of the Agreement shall be binding upon the Law Firm in consideration of the fees which the Law Firm will receive for handling the Tax Petition matters. DANIEL J. BIERSDORF & ASSOCIATES, P.A. By: 12 South Sixth Street Suite 910 Minneapolis, MN 55402 Telephone (612) 339-7242 7 Dan Biersdorf Attorney Registration No. 8 Attorney for Iry and Ruth Schloff FROM POPHAM HAIK MPL.3.*32 4.29.1933 15:29 TO: St. Louis Park City Council and City Manager FROM: City Attorney's Office DATE: April 29, 1993 P. 2 RE: Request for Resolution to be Adopted at City Council Meeting on May 3, 1993 -- Execution of Agreement to Defer Special Assessments for Iry and Ruth Schloff The City Council has been requested to execute an p,areement to Defer Special Assessments to enable St. Louis Park property owners, Iry and Ruth Schloff, to reinstate a certain Tax Refund Petition. The City's co-operation with the property owners would hopefully result in recovery by the City of the special assessments against the property (now totalling over $22,000, with interest). It appears that this situation is unique and does not set a precedent adverse to the City's interests. In addition, it appears that the proposed Agreement is an expeditious way for the City to obtain payment of amounts due and owing. The proposed Agreement does not relate to any other special assessments or taxes owed by the Schloffs to the City. The following summary is based upon representations by legal counsel for the Schloffs. In November of 1992, City Finance Director Harlan Syverson requested that our office assist the City in connection with a request by Iry and Ruth Schloff in regard to reinstating a property tax assessment appeal. The Schloffs own a parcel of real estate located at 3938 Meadowbrook Road in St. Louis Park. The Minnesota Pollution Control Agency ("MPCA") determined in 1989 that the property was contaminated by certain chemicals which would require clean-up. As a part of the clean-up, MPCA ordered the Schloffs to install a pumping system whereby groundwater was removed from the property and discharged into the sanitary sewer system of the City. This resulted in a special assessment against the property for sewer charges in October 1991 in the amount of $18,504.43 (the "Special Assessment"), to be paid with real estate taxes payable in 1992. From May 1989 through June 1991, the Schloffs incurred over $300,000 in clean-up costs, exhausting their financial resources. In June 1991, the MPCA took over all responsibility for clean-up pursuant to the State of Minnesota Superfund legislation. I 484 R 0/25 -FROM POPHAM HGIK MPLS.M32 4.29.199; 15:30 P. 3 The assessor has placed assessed values on the property for January 2, 1988, 1989, 1990 and 1991 in the amounts of $776,800, $800,000, $815,900 and $815,900, respectively. Daniel J. Biersdorf & Associates, P.A. ("Biersdorf"), on behalf of the Schloffs, has filed petitions with the Tax Court contending that the true value for tax purposes is substantially less than the amounts assessed by the assessor. The assessor has already made an offer which would result in a combined tax refund of $42,000 for the years 1988, 1989 and 1990. The Schloffs have not accepted that offer because they believe the true market value for tax purposes should result in refunds in a substantially greater amount than that currently offered. The tax petition filed for the 1991 value for taxes payable in 1992 (the "Tax Petition") has been dismissed for nonpayment of taxes which are due. However, the Tax Court has issued an Order whereby the Schloffs can reinstate the Tax Petition by paying only $5,000 of the current $42,000 real estate tax bill, plus one-half of the Special Assessment, by May 15, 1993. The Schloffs are able to pay the $5,000 ordered, but lack sufficient funds to pay any amount on the Special Assessment at this time. The Tax Petition could be reinstated without any payment on the Special Assessment if the City would agree to defer the due date. Accordingly, it is proposed that the City agree to defer the due date for the Special Assessment until receipt of the refund received pursuant to the tax petitions. The deferrment will enable the Schloffs to reinstate the Tax Petition, and thus obtain funds to pay the Special Assessment. It is currently anticipated that refund check(s) will be received in July or August 1993. Pursuant to the terms of the Agreement, the checks will be deposited in the Biersdorf trust account and disbursed in payment of the Special Assessment, plus penalties and interest, as well as other costs of the Schloffs. The total amount due on May 15, 1993 would be $22,777.31 if paid in full (including the portion of the Special Assessment which is not due until October 15, 1993). Any payment after May 15, 1993 will be increased by interest accrued on the original amount of the Special Assessment ($18,504.43), minus the amount which is not due until October 15, 1993. (Accordingly, interest after May 15, 1993 will accrue only on $13,878.32.) The entire Special Assessment will be paid from the refunds as received, pursuant to the terms of the Agreement, (and, accordingly, it is contemplated that the portion of the Special Assessment due October 15, 1993 will be paid early). t 484JRe/2e REQUEST FORCOUNCIL ACTION DATE May 3. 1993 AGENDA SECTION: Resolutions & Ordinances NO. 8 • ORIGINATING DEPARTMENT: Finance ITEM: Resolution deferring special assessments NO.89 APPROVED: .12rn Interim Finance Dir. Background The owners of real estate located at 3938 Meadowbrook Road have requested the City authorize deferral of a special assessment related to groundwater treatment thus allowing the reinstatement of a property tax petition. Payment of the special assessment would result from tax petition refunds processed by Hennepin County. Discussion The Schloffs are owners of 3938 Meadowbrook Road. The MPCA determined in 1989 that the property was contaminated and required clean up. The Schloffs exhausted their financial resources as cleanup costs exceeded $300,000. The MPCA took over res- ponsibility for clean up after the Schloff's resources were exhausted. The City incurred additional MWCC charges for water treatment related to this property totalling $18,504.43. Because the City could not secure reimbursement of this claim, a special assessment was certified to the property to recapture the cost. The property has an assessed value of $815,000. A petition has been filed with the tax court contending the true value is substantially less. The tax petition is con- sidered valid but has been dismissed for non-payment of taxes. The tax court will reinstate the petition if the Schloffs pay $5,000 and one-half of the special assessment by May 15. The Schloffs can pay the $5,000 but not the special assess- ment. The tax court would accept a deferral of the special assessment from the City as settlement of the assessment issue. The Schloffs have agreed to immediately pay the City the special assessment amount from the anticipated Hennepin County tax refund checks. It appears the proposed agreement is the most expeditious way to resolve this matter. The attached resolution authorizes the Mayor and City Manager to execute the agreement. Recommendation: It is recommended Council adopt the attached resolution. ENGINEERING APPROVAL TAINED FINANCE APPROVAL OBTAINED LEGAL APPROVAL OBTAINED APPROVAL OBTAINED COUNCIL ACTION. MOTION BY 2ND BY MANAGER'S APPROVAL ea.701 OBTAINED TO Jana Severance Popham et al iemgs_,13 CITY OF ST. LOUIS PARK Ot, 19; /193 Dear Jana: Suesan Lea Pace has advised that you will give me Exhibit A referred to and part of the attached resolution. If we do not locate "A" now, it will be very difficult in two years or so. I need it to attach to the City's official copy of the resolution. You may mail it to: 144,44 OFFICE OF THE CITY CLER CITY OF ST. LOUIS PARK 5005 MINNETONKA BOULEVARD STI LOUIS PARK, MN 55416 •mil.s.ftA r /I/ 5005 Minnetonka Boulevard St. Louis Park, Minnesota 55416-2290 Phone: 612-924-2500 Fax: 612-924-2663 Panted on recycled paper