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HomeMy WebLinkAbout06-27-1961336 6 Record of Official Proceedings of the Common Council of the City of - Rochester; Minn., June 27, 1961 �� 11 Minutes of a special meeting of the Common Council of the City of Rochester, Minnesota, held in the Council Chambers in the City.Hall, in said'City, on June 27, 1961. President Tingley called the meeting to order at 4:00 o'clock P. M., the following members being present: President Tingley,Aldermen DeVries, Leonard, Morris, Stadler. Wl lkus:: ITH .Absent': Aldeanan Wilson. The call of the special meeting was read and President Tingley ordered the same placed on file, the said meeting having been called for the purpose of discussing the proposed parking ramp for the City of Rochester and the leasing of current parking lots and any other business the said Common Council may deem proper. • President Tingley stated that he had been informed that the Central Area Improvement Association had ;finished the survey and had come up with a definite plan for a'parking ramp. He then called on Mr. Ekstrand. Mr. Leonard Ekstrand stated that they had not realized this was to be a special meeting, they thought it was going to be informal but they were glad to be here. He said the Central Area Improvement Association is a group of business and professional people downtown who have concerned themselves with the improvement of Downtown Rochester. One of the functions they had. concerned themselves with was the parking situation. He said they had been working very closely with the Mayor's Parking & Traffic Committee and had taken as a special project to concentrate their time on, the matter of a ramp for downtown Rochester. He said they were concerned with the parking situation, they know that it needs attention and they have a proposal they would like to present for the consideration of the Council. He said they had a special.committee composed of John Chisholm, President of Olmsted County Bank & Trust Company as Chairman; Mr. 0. U. Habberstad, President of Northwestern National Bank; Robert Bezoier, President of First National .Bank; and G. Slade Schuster, head of the Section of Administration of the Mayo Clinic. Mr. Fred Schuster and Mr. George Tesar, board members of the Central Area Improvement Association were also present. Mr. John Chisholm then spoke, stating that this committee.was the finance committee that was appointed to look into the problem of financing a ramp if it proved feasible and to present • the matter to the Council and the result of their findings. He said he would like to go into the background for some of the members of the Council who were not present at the previous meeting. He said Central Area Improvement Association, at its own expense, retained National Garages, Inc. and consulted with their representatives in regard to the feasibility of erecting the ramp on Municipal Lot No. 1. He said they conducted a study and the result of their findings he would explain as he went along. He said they also realized that'they would have to have someone who could dig out a lot of information and they retained Mr. Lester Fiegel to get this information. He said they also met with Mr. Harris of the Great Western Railway in regard to obtaining a lease for the property adjacent to the property owned by the City; he said they anticipated some difficulty because Railroad companies do not usually give long term leases but Mr. Harris said they would match the lease the City Would give for the same duration but they - would expect to get a percentage of the profit. Record of Official .Proceedings of the: Common Council 337 of the City. of Rochester,:. -Minn., June 27, 1961 Mr. Chisholm said ,they explored various possibilities to make a ramp -possible - to pay,for it. He said they had to come up with some -"equity money" and they had considerable difficulty in getting this; at one time they considered the possibility of assessing the various property owners and lease holders in business adjacent to the -ramp and found some difficulty in CQ attempting to.procure "equity money" from long term lease holders who -were absent; the property owners were reluctant to go along with such an assessment but some agreed to.go along with it. He said they had numerous meetings with the representatives of National Garages, Inc. after.the study was made and the study will conclusively show that it will be possible to • amortize the.debt that will be incurred by building a ramp.- He said they also discussed -the ,possible various forms of.management but he would not go into that question now but would discuss the final plan that they felt is feasible and will work out successfully.. Mr. Chisholm said the proposal in regard to financing the ramp was this - the proposal is to erect a multiple level parking development of.five stories and the location would be on Municipal Lot No. 1, the property fronting on 2nd Street Southeast. The total cost of the ramp as proposed and, estimted by National Garages, Inc. would be $725,000.00 and in their financial arrangement they had arranged for $750,000.00 because they realized that some -discrepancy could occur in the original estimate. They propose to raise $150,000.00 in "equity money" by the sale of debenture.stocks to downtown merchants who are particularly benefited by the ramp and other people who would like to make such a purchase. They have arranged to have the. Small Business Administraion loan them $225,000.00 and they have a.tentative proposal that the three downtown banks would loan an additional $25,000.00. He said one time when he visited Small Business Administration they gave him a legal opinion that they could subordinate this loan. To accomplish this secondary financing they are organizing a local development company, this will be necessary to qualify for the loan. The Local Development Company will make the application to Small Business Administration and will $150,000.00 capitalize from the sale of bonds.. Small Business Administration then in turn will loan the $225,000.00 to the Local Development Company, thus making a total of $400,000.00.. Then in turn they would appoint.a management organization and'the Local Development Company would in turn loan the $400,000.00 and this is the company that would • manage the ramp. The Management Company would then borrow on a long term first mortgage with assignment on the leases the other $350,000.00.from an insurance company; he said they had investigated the possibility of borrowing money from an insurance company and they had shown interest. He said their proposal to the Council would be to have the City execute a long term lease to this Management Company for $1.00 per year on Lot No. 1 - the City Attoaney had rendered his opinions that the City could do this. They would also obtain a matching lease from the Railroad Company with the same kind of maturity. The other lot they are interested in at this time and that they consider would be, necessary for the Company to control would be Lot No. 3, this lot is dedicated property and would not be eligible on the same bats as Lot No. 1 and thgy execute a management contract to the Management Company. • - I � 3 3 _ . Record of Official Proceedings of the Common Council of the City of Rochester, Minn., June 27 , 1961 • OSWALO PUBLISHING CO., NEW ULM, MINN. A3528 He pointed out that Lot No. L and the Railroad Company property would go on the tax rolls and would be assessed at the regular tax rate, which would amount to approximately $28,000.00. He said at their last meeting they thought probably it would be better -if -they could avoid the payment of taxes and return this principal but the City Attorney told them this would -not be possible, so the only way would be to place the property on the normal tax rolls. He said the figure of $28,000.00 was obtained from the City Assessor and was estimated by him on the amount �of $750,000.00. The Board of Directors of Management of the Management Company would be appointed consistent with the common stock holders and they would elect a Board of Directors and I assume this would be.similar to the Board of the Central Area Improvement Association and they would handle these two lots.. Mr. Chisholm then explained the income from the parking ramp. He said the plan is b set a fee of 15p per hour for the ramp or a $1.00 maximum all day, in the study there would be a 2.46 turnover for 477 cars or 354; per car, which for a year would be $128,609.00 and there would be an additional surface space adjacent to this -ramp that they would lease for $10.00 a month on a permanent basis for a gross revenue of $12,240.00,- making a total of estimated revenue of $140,849.00. The ramp would have a total of 477 cars and the lot would have 102 giving a total capacity of 579 cars. The expenses in regard to the operation would be - the direct operating expenses are estimated at $33,000.00 leaving anet•revenue before fixed charges of $107,849.00; the real estate taxes are estimated at $28,000.00 and the principal and interest on the money estimated.at $61,168.00)(all 3 financing groups) so operating at normal capacity there would be a net balance of $18,816400. It was indicated that in the first year because of construction, etc. they could not expect normal capacity, they did not think normal capacity could be reached until the third year. Out of the balance of $18,816.00 would still have to come the amount to the Railroad Company for their lease, the remainder or any net profit would be dedicated to improve parking or the erection of additional parking facilities as the need might arise. He said no one is going to benefit, it is entirely a civic endeavor.. He said it was the opinion of the committee that this was the most reasonable method to handle this type of situation and thought the Council was going to have to decide if they were going to have public or private parking-. He said they felt there was a definite need for a ramp and felt without adequate parking the downtown property would deteriorate in value. President Tingley said he thought the general idea was for the City not to have'any parking lots and questioned what would happen to the other two lots. Mr. Chisholm said the only lot that would actually affect the investment would be the one across the street, the lots not immediately adjacent would not.be of any advantage at this time. Alderman Stadler said at their previous meeting he thought they indicated they would like some assurance from the City that if the ramp were undertaken the City would not engage in operating parking lots. He also inquired if civil defense could be put in such a ramp and have the basement used as a public shelter. -Mr.-Chisholm, stated that the present plan has no basement I 1 E 1 1 • 1 u Record of Official Proceedings of the Common Council 339 of the City of - Rochester, Minn;.June 27 ; 1961 1 cc • 1 0 1 • D- 0 1 area, there would be elevators and would have 5 stories; he said the question had been raised at one of their meetings as to whether it would be economical to have a basement and they found it would be very expensive. Alderman Morris asked if there would be room for another ramp on the south side of the proposed ramp. Mr. Chisholm told him "no", the Railroad wants clearance for visibility purposes and there would not be enough room when they were given the number of feet for visibility that they need: R. V. Ehrick, City Attorney, asked if they anticipated that the corporation would be exempt from income taxes. Mr. Chisholm said he presumed so but had not pursued the point. Mr. Ehrick asked about the terms of the management contract on Lot No. 3; Mr. Chisholm said this would have to be worked out with the Council, this was something that was discovered after meeting with'the Council Committee. Mr. Ehrick asked the length of the term of the loans and was told it was 20 years. Mr. Ehrick also stated that the City owned all the land and if this is going to be private parking why should the city not have a return on the land other than taxes, that is not a return just an obligation, so he did not think the city should be asked to lease it for $1.00; also the city now got approximately $35,000'.00 in revenue and this would have to be offset some way, he said he felt the city could build the ramp and charge 10-A, and still meet the obligations. Mr. Chisholm said he did not think it would complicate thins to assume the responsi- bility for the fireball lot. He said they just assumed that it was the opinion §f some of the committee that this would not be a good idea, obviously the idea has changed and he said their committee would study this. After a lengthy discussion, President Tingley said he thought the Council would have to decide if they were going to have private or municipal parking but did not think the decision would be arrived at tonight, he said he would like further time to think it over. A motion was then made by Stadler, second by Morris, that this be taken under advisement until the meeting of July 3, 1961. All present voted in favor. Upon motion by Leonard, second by Stadler, the meeting was adjourned. i exk�,& Citq Clerk