City of Orem s3

CITY OF OREM CITY COUNCIL RETREAT April 6, 2001

1:00 P.M. CITY COUNCIL RETREAT

WELCOME Mayor Jerry Washburn

OREM ELECTED OFFICIALS Councilmembers Joseph C. Andersen, Judy Bell, Les Campbell, Karen McCandless, and Bill Peperone

APPOINTED STAFF Jim Reams, John Park, and Donna Weaver

VINEYARD ELECTED OFFICIALS Mayor Rulon Gammon and Councilmember Randy Farnworth (both left the meeting at 1:55 p.m.)

VINEYARD PLANNING COMMISSION Jack Holdaway and Sherry Teschner (both left the meeting at 1:55 p.m.)

OTHER Golden Holt, Golden Landscaping; and Randy Deschamps, developer

Mayor Washburn called the meeting to order at 1:10 p.m. He said that this would be an opportunity to discuss projects involving both communities. Indicating that the Orem Council would forego the tour, Mayor Washburn invited comments.

Mr. Farnworth said that he has never seen a plan for the Orem golf course property.

Mr. Park, showing a plan of the golf course and housing design, indicated that there would be a number of tough issues for both communities to work through. One would be the layout of roads, and another would be water and sewer issues. There are a few options available to deal with them, but the Vineyard council members would need to determine what they would like done. He noted that the Church of Jesus Christ of Latter-day Saints is looking at property for a stake center near the area.

Mayor Gammon expressed appreciation for Orem’s willingness to work with Vineyard on the roads and the water and sewer needs.

Mr. Park remarked that Orem must think long term about the location of its only water tank, which is situated on a fault line. A centrally located water tank would meet Orem’s needs and meet Vineyard’s as well. He stated that it would eventually be necessary to make some boundary adjustments--defined as a cooperative boundary line adjustment.

City Council Retreat Minutes - April 6, 2001 (p.1) Mrs. Bell asked if the Vineyard Council is comfortable with most of the housing in the project being located in Vineyard. The town has such a small population, that this project would greatly impact it; Vineyard could look very different in five years. Mayor Gammon agreed, saying that it would completely change the balance of power. He said that the growth is inevitable.

Mr. Campbell asked what the specifics are about the road issues.

Mr. Holt and Mr. Deschamps showed an aerial map of the area and identified where potential roads would be needed.

Mayor Gammon said that one of the goals would be to maintain Holdaway Road as a historical road. It is important to keep the traffic off of it and protect its sanctity.

When Mr. Reams asked what roads would be built as part of the developments, Mr. Park replied that there would certainly be an access road. Other roads would have to be determined later in the process.

Mayor Gammon remarked that he has heard talk about bringing 400 South down to the golf course. Mr. Park said that a connection to 400 South would only be temporary and would provide access to get the project started.

At the request of Mr. Peperone, Mr. Park identified the planned location of the clubhouse and where its access would be. He indicated that home sites would be under construction at the same time that work is being done on the golf course.

Mayor Washburn expressed concern about the expense of building a temporary road. Mr. Peperone said he does not have a problem with it, and Mr. Reams said it would only be asphalt without curb and gutter.

Mr. Farnworth wondered how the church property would be accessed

Mr. Park reflected that the church property would create more challenges for the road plan than anything else. He said that one access would be off of 1000 South. The issue would be in connecting Springwater Park Drive.

Mr. Peperone commented that the idea is to show a road connecting to 1000 South with a gentle sweeping curve, and Mr. Reams noted that it would also be a controlled intersection with a traffic light. Mr. Peperone stated that even though a lot of the housing projects will be in Vineyard, Orem’s plans should include them, so residents can see where everything will be located.

Mr. Reams observed that moving the road south would also allow for the Geneva Road overpass sometime in the future.

City Council Retreat Minutes - April 6, 2001 (p.2) Mayor Gammon remarked that Vineyard is so flat it would be necessary to pump water to the new development, or perhaps buy a couple of lots on the hill in Orem to provide water pressure. Mr. Reams said it would make sense for the two communities to work together on this issue.

Mr. Peperone indicated that he comes from a part of the country where all of the water tanks are raised; anything that can be done to avoid that would be good. He stated that there are some residents who will not be happy with this plan, and it will take some finesse to deal with them.

Mrs. Bell said the neighbors feel they were promised that their subdivision would not be open to traffic. They are concerned that people will use the neighborhood as a shortcut to the golf course.

Mayor Gammon remarked that there is a real need for fire suppression equipment for the area west of the freeway. A site should be identified for a future location, and perhaps the two cities can work together on the structure. He added that the residents west of the sports park are concerned about privacy fencing. There are also concerns that berms would create some blind areas and could be a public safety problem.

Mr. Park said that a white, vinyl coated chain link fence is now made and might be appropriate. There could be some sharing of the cost.

Mr. Peperone asked if the Vineyard council members are confident about being able to work through the road, water, and sewer issues, and Mayor Gammon replied that he believes they would be able to do that. They are just waiting now to see the site plan.

Mrs. Bell said that the relationship between the two cities has improved during that last few years, and she appreciates that.

The Vineyard contingency left the meeting at 1:55 p.m.

GOLF COURSE CONTRACT

Mr. Park stated that Greg Stephens, who is the best contract lawyer he knows, prepared the golf course agreement. This proposal would fund the golf course with very little risk to the City. Mr. Park noted that THK Associates, one of the top two financial analysts for golf courses in the U.S., prepared a report on Orem’s proposed course. It had some good news in it as well as some bad news. The good news is that a golf course is financially feasible, but the City would have to borrow more than $6 million to pay for it. Mr. Park said that Golden Holt has proposed that he obtain the financing to construct the golf course, and he would then build and operate it for fifteen years. Taking the estimates from the study and amortizing the revenue strain, Mr. Holt would make his money back plus six percent. Mr. Holt would essentially be leasing the course for twenty-five years--with no lease payment for the first fifteen years. After that, he would pay a fee of $515,000, indexed at 3 percent per year. Mr. Park indicated that the golf course would open in July of 2004 in this scenario. The “win” for Orem is that it would not be necessary to do any bonding, and the City would not have any risk associated with making a bond payment.

City Council Retreat Minutes - April 6, 2001 (p.3) Mayor Washburn wondered if an 18-hole course at Cascade had been considered in the THK report, and Mr. Holt said that he believes it did. It considered all proposed golf courses in the valley.

Mr. Park noted that one downside to taking this route is that the City would lose any profits that it might have received, and Mr. Reams noted that it would also avoid any losses that could have come as well. Mrs. Bell remarked that residents have been concerned about the golf course serving alcohol and being open on Sunday, and Mr. Reams indicated that revenues from the sale of alcohol were removed from the last THK study. Mr. Park added that if Mr. Holt is running the golf course, being open on Sunday is no longer a City issue.

Mr. Holt said that he does not intend to serve alcohol. It would be important to have the course open on Sunday, because 25 percent of the estimated revenues come from Sunday play.

Mr. Park indicated that another downside to this proposal is that if Mr. Holt begins construction and goes “belly up,” the City would have a half-built golf course. The City would be able to keep the improvements that were in place, but it would be necessary to bond to finish the construction or sign an agreement with someone else to complete it.

Mr. Holt informed the Council that there would be a $2 million payment bond during construction. He would have to prove to the City how he would pay for this project before construction could begin.

Mr. Park said that his concern was that it not be possible for someone associated with the construction to put a lien on the property. The payment bond would guarantee that no liens could be placed on the property, but any work being done would be paid for.

Mr. Park noted that the proposed contract states that some land “swaps” would need to take place, but at no time during those transfer would the City own less than 177 acres.

Mayor Washburn commented that there could be a difference in the value in some of the properties being traded and wondered if the City would be devaluing its property.

Mr. Park stated that the City would end up with 310 acres, including all the wetlands it already owns. In the very worst scenario, the City would trade upland property for upland property and wetlands for wetlands.

Mr. Holt remarked that until a final plan is selected, it is not possible to determine exactly how much land the golf course would require. He said there could be some extra property that he would like to purchase, which would be added to the residential development.

Mr. Park mentioned that there are some items associated with the golf course development that the City would pay for, such as putting a sewer line down the meander line from the lift station to a specified area and running a sewer line to the Kay Holdaway property. Mr. Park said that in the water master plan, a loop from the bottom of Springwater Park to the 400 South property is planned. He indicated that a water re-use line should be installed as well.

City Council Retreat Minutes - April 6, 2001 (p.4) Mr. Campbell wondered if there would be any problems with re-use water, and Mr. Park commented that a sand filter could be used.

At the request of Mr. Reams, Mr. Park reviewed the process proposed to guarantee that the City would have a $6.5 million golf course in the end. He said that the City would require the developers to show they have selected the most efficient and quality-conscious bidder. The City would audit the bills as they are paid against the $6.5 million. The City would look at whether the expenses have been approved and paid and if checks and balances are in place. Golden Landscaping would do some of the work in-house. Mr. Park indicated that a copy of agreement was sent to THK representatives, and they will review it in line with the Price lawsuit to make sure the City is getting value out of the agreement.

Mr. Holt remarked that one seldom sees a contract that is a perfect balance. He stated that if he does not develop a first class golf course, he would be hurt and not the City.

Mayor Washburn indicated that some citizens might say that the contract does not just construct a golf course but a housing development as well. There could be concern that the money would be put into the homes rather than in a high-class golf course.

Mr. Campbell wondered if Mr. Holt was absolutely certain that the golf course could designed, so that in a few years the Council would not have to be deal with problems that Cascade has experienced. Mr. Reams stated that the contract requires that the golf course be designed to anticipate errant designs.

Mr. Holt said that he is looking at having Johnny Miller design this course, and he wouldn’t design a course like Cascade.

Mr. Peperone commented that he would like to see the design for the homes and the golf course together.

Mr. Park reviewed the operations requirements in the agreement, saying that on the second year after operation, money would be donated to the City to use as determined by an advisory committee. Mr. Park indicated that Mr. Holt would be required to give the City Council a yearly report. People living in the homes near the course would not be able to get a group rate at the golf course.

Mr. Holt stated that Orem’s goal in constructing this golf course is to make it available to as many people as possible, since it would still be a municipal course. The prices should be within a certain percentage with five comparable golf courses.

Mr. Reams asked how the Council members feel about the agreement, and Mr. Peperone and Mayor Washburn said they are comfortable with it. Mrs. Bell stated that she would have problems calling it Orem City Municipal Golf Course, since it would be open on Sunday.

Mr. Campbell reflected that it would be important to educate Orem’s citizens about the agreement, so they know it is being leased and operated by a private entity.

City Council Retreat Minutes - April 6, 2001 (p.5) Mayor Washburn said that a classy name for the golf course would be appropriate, and Mr. Holt said that he would like to be able to tie the name of the golf course to the name of the development.

In response to a query from Mayor Washburn about a renewal agreement at the end of the contract, Mr. Park indicated any renewal should be negotiated when the initial contract is fulfilled. He suggested that the renewal should be for five-year increments with a requirement that either party give a year’s warning to withdraw early. Mr. Campbell asked if it is necessary to put this agreement to a public vote, and Mr. Park replied that it would not, since it would not involve any of the City’s funds. Mr. Campbell commented that there are some in Orem who expect it to go to a vote.

When Mr. Reams said that the City Council never made a commitment to put this issue to a vote, Mr. Peperone agreed. He said that he has read all of the minutes on this issue; the Council never made a promise to put it to a vote.

Mayor Washburn suggested that when Council members are asked about the golf course, they should tell people that the Council has chosen another path for its construction.

Mrs. Bell reflected that in many ways the City will have privatized the golf course.

Mr. Peperone asked Mrs. Bell if her only concern about the golf course dealt with the bonding, and she replied that it was. She declared that this agreement would allow Orem to get an 18-hole golf course without risk.

Mr. Reams said that it is a private/public agreement.

The Council and staff then reviewed the agreement page-by-page, identifying questions, concerns, and grammatical changes.

Some of the concerns raised by the Council and staff included the following:  Concern was raised about building a golf course on leased property.  The City representative identified in the agreement should not be given more authority than the City Council.  There should be a clear separation between the expenses associated with the golf course and the housing development. Instruction was given to add a paragraph identifying the shared expenses such as the roads, etc.  There should not be a public perception that the golf course construction would pay for the housing development.  The City should only be responsible for any toxic cleanup on property that was part of the original agreement.  Any decision to use re-use water from the Wastewater Treatment Plan would be made by the City Council.  Direction was given that the paragraph stating that Mr. Holt must have Council approval before initiating publicity be removed.

City Council Retreat Minutes - April 6, 2001 (p.6)  The City does not charge building fees on its own projects (i.e., the golf course), but it should be clearly stated in the agreement that the housing development would be required to pay them.  The issue of the County possibly charging taxes on the leased but City-owned golf course property was raised, and it was decided that the attorneys would be consulted about it.  The issues of mosquito abatement would have to be addressed.  Though Mayor Gammon and Mr. Farnworth expressed acceptance of the proposed density for the housing development, there are others in Vineyard who do not feel the same way.  Mr. Holt should have a neighborhood meeting with the residents in Springwater Park and then host an open house.  It should be clear that no final decision has been made to connect Springwater Park Drive to the golf course property.  More time should be spent in neighborhood meetings during the development process to prevent the accusation that the City is moving too fast.

Mayor Washburn then asked how the Council members feel about the agreement. The consensus of the Council members was that they were comfortable with it.

Mr. Holt commented that the “wildcard” is still Vineyard, so he would pursue that issue first. He said that he has attended a joint Vineyard Planning Commission and City Council meeting already, and the residents appreciated the time he spent with them. He asserted that Vineyard representatives told him they would try to match timelines with Orem. Mr. Holt said he hopes they will hold to that.

ECONOMIC DEVELOPMENT

Mr. Reams stated that this was intended to be an open discussion. The budgets are going to become tighter and tighter over time. He said he recognizes that the Council has been struggling with the proposal to implement the cell phone fee to help fund some of the Public Safety needs. Mr. Reams indicated that there are many needs in the community right now, and there is a block of tax money in the community called tax increment financing that the City is not utilizing. Those taxes are going to be collected whether the City uses them or not. If the Council decides not to use them for Orem’s needs, then the City must find the money via General Obligation Bonds, increased property taxes, etc.

Mr. Reams continued, saying that redevelopment agencies (RDAs) had a bad connotation in years past. There was controversy about (1) how blight was established and the public perception of that process; and (2) giving one business owner an advantage over another. Because of that, the legislature made changes to the RDA laws. He said that there is a role for the RDA in areas such as south State Street. Mr. Reams explained that business owners have value in their buildings as well as their land. In rundown areas, new developers may not be interested in the buildings but must pay for them anyway. Some ways to deal with that issue are to provide higher density, help finance the improvements, or reduce the costs of the projects. Otherwise, the cost to improve rundown areas will still be too high, and the areas will continue to decline.

City Council Retreat Minutes - April 6, 2001 (p.7) If a new RDA project area were created, it would have to use the new criteria established by the legislature, which is very strict and must be reviewed by a taxing committee. CEDO could also be asked to participate as an advisory committee in this. Mr. Reams stated that there are some differences between a RDA and Economic Development Agency (EDA). An EDA does not require a finding of blight, and it does not have the right of eminent domain. It would still be necessary to get the approval of the taxing authority for an EDA by showing an economic reason for creating it. It is also required that a portion of the increment must be put toward affordable housing. Mr. Reams commented that perhaps those funds could be given to CDBG/HOME for distribution.

Mr. Reams indicated that, as he discussed with the Council, he has signed an agreement with Johnalyn Walker, an authority on RDAs, to advise the City. Mr. Reams noted that most communities in Utah County use RDAs, including Provo, which used one for the construction of the Provo Towne Centre. RDAs provide local government with a financing tool. The old RDA law allowed the tax increments for twenty-five years. Each five years the increment would reduce a specified percentage—called a “haircut.” All of Orem’s projects are at 75 percent. The law recently changed, so that it is possible for the cities to capture the haircut money, which would amount to approximately $638,000 for Orem. Mr. Reams reaffirmed that the taxes are already being collected; it would not be necessary to create a new RDA area in order to collect the funds.

There are additional funds currently going to the schools that the City could try to capture as well. Contrary to the appearance, it would not take money away from the schools, though, because the State has guaranteed that they will receive their current level of funding. Applying for the school portion would not hurt the schools. The key is that any projects must be started by June of 2001. The additional funds could be used for any park projects allowed by the Zoo, Arts, and Parks (ZAP) tax, frontage road projects, or any cultural facilities. The haircut money can be captured for up to thirty-two years. It is simply a matter of writing a letter, but the County must receive notice by this November if the City plans to use the funds.

Mrs. Bell remarked that it would be silly for the City not to go after the haircut money, and Mrs. McCandless agreed.

Mayor Washburn said that the tax will be collected regardless of what the Council does. The question is where all of the funds will be spent.

Mr. Reams stated that the taxing entity would not be willing to approve a request unless there is a very good reason for it. He said it would be interesting to improve half of State Street and leave the other side as it is for a while--for contrast. He declared that South State Street is proof that redevelopment will not happen without a RDA.

Mr. Peperone said it is cheaper for businesses to move out of the City than to buy unneeded structures.

Mayor Washburn indicated that it would be important to show the school district that no school funding would be reduced. Mrs. Bell added that the City might be able to use some of the

City Council Retreat Minutes - April 6, 2001 (p.8) money for a swimming pool that the schools could use; it would be to the districts advantage to support for it.

Mr. Reams asked how the Councilmembers feel about pursuing the haircut money.

Mr. Andersen commented that he would be comfortable using the funds as long the length of the project is not extended.

Mr. Peperone said the City should go after the haircut funds. Mrs. McCandless and Mrs. Bell agreed.

HALE CENTER THEATER

Mayor Washburn informed the Council that representatives of the Hale Center Theater (HCT) and developer Bruce Dickerson have approached him. The Theater has obtained a tax-exempt status, and Marie Osmond’s husband will be their new head of fundraising. The Mayor indicated that Stephen Covey has offered property and money to HCT if they would come to Provo, though they have informed him that they would like to stay in Orem. The City’s options are fairly limited right now. The County is working on the process to put the ZAP tax to a vote. Mr. Dickerson has indicated that if the City can give some kind of funding commitment, he would be willing to move ahead with the Hale project.

Mr. Campbell said that he has been working with an old acquaintance, Karen Nelson, who is affiliated with the HCT. He indicated that he had hoped for some information from Karen Ashton’s foundation. He said he has been told that if there is enough interest, Ms. Ashton and others will work to keep the HCT in Orem. Mr. Campbell expressed concern about competing with Stephen Covey.

Mrs. McCandless said that she would prefer to help the HCT with private rather than public funds. She wondered how much community pride is associated with the Hale Center Theater, because she would be comfortable letting HCT go to Provo.

Mr. Campbell said it is a quality of life issue for many people

Mayor Washburn asked if there was any financial advantage to keeping HCT in Orem, and Mr. Reams said that if the businesses surrounding it were retail in nature, there would be sales tax revenues.

Mr. Peperone remarked that he would be willing to refund a tax increment to retail in that location if they could show high enough numbers. He said that he thinks 800 North would develop with office space rather than retail without HCT.

Mrs. McCandless said that she would be more comfortable supporting the project if retail were to come with HCT.

City Council Retreat Minutes - April 6, 2001 (p.9) Mrs. Bell reflected that she is concerned about Orem’s tax base and Provo’s savvy in stepping up to do innovative things. The haircut money is available and HCT would qualify. She suggested that the City combine some of the haircut money and a tax increment.

Mr. Reams noted that if the haircut money is used next year for HCT, then the City would lose a bonding opportunity for construction.

Mr. Peperone declared that Orem must do more to protect its tax base. Pleasant Grove’s interchange is coming, and they will do an EDA to get their infrastructure in place. He said that he knows people who live in Cedar Hills and shop at Orem’s Maceys store, but with the intersection Pleasant Grove store will be closer.

Mayor Washburn said that if Mr. Dickerson does not bring retail to Orem, the City would not have to pay anything.

Mr. Peperone indicated that when Orem gave money to the Armory for a basketball court, the City got use of the facility. Something like that should be done with HCT.

Mr. Campbell declared that, in the long run, he would like to see HCT in Orem.

Mr. Andersen said he does not want to do a sales tax increment for HCT, though he does not have a problem with using some of the ZAP tax revenues. He indicated that he does not feel that HCT is a huge part of the community, so he would not be heartbroken to see it go to Provo.

Mr. Campbell commented that he spoke with Mr. Sandstrom, who informed him that he would be more in favor of supporting HCT if the amount was less than the requested $1 million.

Mayor Washburn said he would rather use tax for HCT and encourage other retail. Once the initial financial commitment is fulfilled, all revenues would come to the City. HCT would function as a cultural anchor.

Mrs. Bell stated that Orem needs to “step up to the plate,” or the City will be sorry.

Mr. Reams, saying that an independent analysis would be needed, suggested that the City offer a sales tax increment of up to $35,000 a year for ten or twelve years.

OLYMPIC MASCOTS FOR SUMMERFEST PAID FOR OUT OF COUNCIL CONTINGENCY

Mr. Reams asked if the Council was willing to pay $2,000 for the Olympic mascots to come to the Summerfest.

The Consensus of the Council was to proceed with that suggestion.

SOLID WASTE

City Council Retreat Minutes - April 6, 2001 (p.10) Mr. Reams reviewed the solid waste contract bids with the Council, noting that each was higher than the original renewal offer provided by Waste Management earlier in the year. He suggested that he sit down with each to see what could be negotiated.

Mr. Andersen stated that he does not want the recycling fee to go up, and Mr. Reams added that it would kill the program if it did.

Mr. Campbell left at 6:07 p.m.

PD-21 ZONE (PARKWAY CROSSING)

Mr. Peperone informed the Council that the developers of Parkway Crossing have determined that they need help with the “people mover” and the parking structure.

Mr. Reams said the developers discovered that they had underestimated the cost of the parking structure, though the “people mover” was fairly close to the estimates. The developer is asking for the City to participate in the project by setting up a RDA. Mr. Reams stated that he does not believe the City should participate at that level.

Mrs. Bell remarked that she would be more comfortable with a special improvement district, and Mr. Reams said they would like a RDA as well. Mayor Washburn indicated that the developer came in good faith to the Council with no hint that the City might be expected to help. He expressed concern about the viability of the project if the $3 million people mover could “break” the project. The Mayor said that some lobbyists have reviewed the figures and suggested that the developer approach the City for help. He questioned whether that help is really needed, or if it would just enrich the project.

Mrs. Bell declared that this project is vital to the community, and she does not want it to go away.

Mr. Reams stated that he did not think the Council had enough information, and he would do some investigation.

Mr. Reams commented that Meier Frank (formerly ZCMI) is not doing as well as they had hoped they would.

Mrs. Bell said that more people were supportive of it when it was ZCMI, because they linked it to the Church of Jesus Christ of Latter-day Saints.

Mr. Reams indicated that he has not experienced very good service when shopping there, and the selection was poor. He expressed concern that the original agreement was for a ZCMI, which was a known entity. The need to make incentive payments to them ends in March 2002, when Nordstroms opens. He said the challenge is that the City did not budget for this payment, so the funds will have to be somewhere in the budget.

City Council Retreat Minutes - April 6, 2001 (p.11) The meeting adjourned at 6:20 p.m.

______Donna R. Weaver, City Recorder

Approved: May 8, 2001

City Council Retreat Minutes - April 6, 2001 (p.12)