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VII.2. Detachment and Annexation of Minnetonka Property; ElverumMay 5, 2020 Council Report 2020-030 DETACHMENT AND ANNEXATION OF MINNETONKA PROPERTY Proposed Action Staff recommends adoption of the following motion: Move to approve Resolution 2020-022 and Resolution 2020-023 Requesting Concurrent Detachment and Annexation of Certain Lands Pursuant to Minnesota Statute Section 414.061. With this motion, the process of detachment and annexation will be initiated. Overview The City of Minnetonka is requesting to annex into Minnetonka a portion of the parcel at 2 Shady Oak Road. The purpose is to facilitate a redevelopment project, Shady Oak Crossings, whereby the annexation allows for a better design and financial structure for the proposed development. To compensate the City of Hopkins for the lost tax revenue and future redevelopment potential, the City of Minnetonka offered a one-time payment of $74,000. That offer was discussed at the January 14, 2020, work session and the general feedback was that the Hopkins City Council would prefer a land exchange that provided taxes in perpetuity and preserved redevelopment opportunities in the future. There were also questions raised about the need for the additional property which are answered by Minnetonka in the attached memo. Minnetonka has responded with an offer to annex the portion of the Hopkins property in exchange for the parcel at 11524 Excelsior Boulevard (Subway property). The owners of both 2 Shady Oak Road and 11524 Excelsior Boulevard are in agreement with the proposed annexation/detachment. Primary Issues to Consider • Why is the land beneficial for the Minnetonka development? • What is the financial impact on the City of Hopkins? Supporting Information • Resolutions 2020-022 and 2020-023 • Map – Parcel Split Exhibit • Memo from City of Minnetonka • Link to full Minnetonka Council report: https://www.minnetonkamn.gov/home/showdocument?id=6658 ___________________________ Kersten Elverum Director of Planning & Development Financial Impact: $__0__________Budgeted: Y/N ____ Source: ________________ Related Documents (CIP, ERP, etc.): _______________________________________ Council Rpt 2020-030 Page 2 Analysis of the Issues: Why is the land beneficial for the Minnetonka development? The additional land for the Minnetonka development by Ron Clark will allow the building to have access to the underground parking from the controlled intersection of Shady Oak Road and Mainstreet, taking most of the traffic from the local street, Oak Drive Lane. This is preferred from a traffic management and neighborhood perspective. It also provides a larger footprint which allows for a preferred building design and an increase in unit count from 49 to 75. What is the financial impact on the City of Hopkins? While splitting the parcel at 2 Shady Oak Road limits the future redevelopment potential, especially if it could be combined with the property to the south, the proposed detachment/annexation arrangement does provide an increase in annual property taxes and maintains some future redevelopment opportunity. The following is a chart comparing the two properties: Property Size 2020 Tax Value City (Hopkins) 2020 Taxes 2 Shady Oak Road .36 acres $235,000 $1,808* 11524 Excelsior Blvd .47 acres $635,000 $5,471** *city taxes on entire parcel - remnant parcel value unknown **city taxes paid if property was in Hopkins The Subway property is currently served by City of Hopkins water and sewer so the only modification is to install Hopkins meters, which the City of Minnetonka has agreed to facilitate and pay for. The City of Minnetonka has agreed to pay all costs associated with the annexation/detachment process. Alternatives: The Hopkins City Council has the following options: • Approve Resolutions as presented • Amend Resolutions. This action will require concurrence with Minnetonka. • Elect to not pursue the annexation/detachment at this time. This action will result in the Minnetonka development to go back to previous designs. City of Hopkins Resolution No. 2020-022 City of Minnetonka Resolution No. 2020-022 JOINT RESOLUTION REQUESTING CONCURRENT DETACHMENT FROM HOPKINS AND ANNEXATION TO MINNETONKA OF CERTAIN LANDS PURSUANT TO MINNESOTA STATUTES SECTION 414.061 WHEREAS, certain real property, approximately 0.36 acres in size, legally described and depicted on Exhibit A attached hereto and incorporated herein and depicted on the survey thereof attached hereto and incorporated herein as Exhibit A (the “Annexation Property”) is located in the City of Hopkins; and WHEREAS, the Annexation Property is located southerly of and abutting real property estate that is located in the City of Minnetonka; and WHEREAS, Ron Clark (“Developer”) desires to incorporate the Annexation Property into a proposed plat and residential development known as Shady Oak Crossings; and WHEREAS, the Annexation Property is part of a larger tax parcel, with a street address of 2 Shady Oak Road, Hopkins, MN and a tax parcel number of 23-117-22-42-0056; and WHEREAS, the City of Hopkins, the City of Minnetonka and the Developer desire that the entire Shady Oak Crossings plat and development be located within the boundaries of Minnetonka by detaching the Annexation Property from Hopkins and annexing the Annexation Property to Minnetonka; and WHEREAS, the detachment of the Annexation Property from Hopkins will result the division of tax parcel number 23-117-22-42-0056 into the Annexation Property and a separate parcel, legally described and depicted as the “Remainder Parcel” on the attached Exhibit A; and WHEREAS, the division of tax parcel number 23-117-22-42-0056 is a lot line adjustment that may be administratively approved and does not constitute a subdivision within the meaning of the City of Hopkins subdivision ordinances; and WHEREAS, the City of Hopkins wishes to preserve future redevelopment opportunities for the Remainder Parcel; and WHEREAS, the city of Minnetonka desires to transfer this property into the city of Hopkins in a “land swap” between the two cities; and WHEREAS, the City of Hopkins and the City of Minnetonka desire to modify their respective boundaries by detaching the Annexation Property from the City of Hopkins and annexing the Annexation Property to the City of Minnetonka pursuant to Minnesota Statutes Section 414.061. NOW, THEREFORE, BE IT RESOLVED: 1. The City of Hopkins and the City of Minnetonka jointly request that the Office of Administrative Hearings – Municipal Boundary Adjustment concurrently detach the Annexation Property from the City of Hopkins and annex the same to the City of Minnetonka at the earliest possible date. 2. The city clerk for each city is directed to submit this Joint Resolution to the Office of Administrative Hearings – Municipal Boundary Adjustments for the purposes set forth herein. 3. The City of Hopk ins and the City of Minnetonka agree that, within 30 days of receipt of this Resolution, passed and adopted by each party, the Office of Administrative Hearings – Municipal Boundary Adjustments, may review and comment, but shall order the concurrent detachment and annexation consistent with the terms of this Resolution. 4. The City of Hopkins has designated a Comprehensive Plan Land Use Guiding of Commercial and a Zoning District designation of Commercial for the Annexation Property. As a condition of annexation of the Annexation Property into the City of Minnetonka, the Developer is required to combine the Annexation Property with tax parcel 23-117-22-42-0057. Upon annexation into the City of Minnetonka and the filing of the tax parcel combination, the Annexation Property shall have a Comprehensive Plan Land Use Guiding designation of High Density Residential and a Zoning District designation of Planned Unit Development. These designations match the existing comprehensive plan land use guidance zoning designation for tax parcel 23-117-22-42- 0057. 5. As a condition of the Shady Oak Crossings development approvals, the City of Minnetonka agrees to require a cross access easement to provide joint use of the driveway by the Annexation Parcel and the Remainder Parcel. In approving the cross access easement, the City of Minnetonka will ensure that future redevelopment opportunities of the Remainder Parcel are not precluded and that the function of the driveway to the Shady Oak Crossings development will not compromise or restrict the use of the driveway in providing future opportunities for the redevelopment of the Remainder Parcel. 6. The City of Minnetonka is responsible for all costs associated with processing this Resolution, including reimbursement of reasonable attorney’s fees incurred by the City of Hopkins. 7. The City of Minnetonka and City of Hopkins will not submit this Resolution to the Office of Administrative Hearings – Municipal Boundary Adjustments until the City of Minnetonka has granted final land use and financing approvals for the Shady Oak Crossings residential development project. 8. This Resolution is conditioned upon approval of the concurrent detachment/annexation Resolution for the 11524 Excelsior Boulevard property also requested by the city of Minnetonka and city of Hopkins. Adopted by the City Council of the City of Minnetonka on Feb. 24, 2020. ____________________________ Brad Wiersum, Mayor ATTEST: ______________________________ Becky Koosman, City Clerk Action on this resolution: Motion for adoption: Kirk Seconded by: Schack Voted in favor of: Kirk, Schack, Carter, Calvert, Schaeppi, Coakley, Wiersum Voted against: Abstained: Absent: Resolution adopted. I hereby certify that the foregoing is a true and correct copy of a resolution adopted by the City Council of the City of Minnetonka at a meeting held on Feb. 24, 2020. ______________________________ Becky Koosman, City Clerk (Seal) Passed and adopted by the City Council of the City of Hopkins on the ___ day of _____________, 2020. ___________________________ Jason Gadd, Mayor ATTEST: ______________________________ Amy Domeier, City Clerk CERTIFICATION The undersigned, being the duly qualified Clerk of the City of Hopkins, hereby certifies the foregoing Resolution No. _____ is a true and correct copy of a resolution presented to and adopted by the Council of the City of Hopkins at a duly authorized meeting thereof held on the ____ day of __________, 2020, as shown by the minutes of the aforesaid meeting in possession of the undersigned. ______________________________ Amy Domeier, City Clerk (Seal) City of Hopkins Resolution No. 2020-023 City of Minnetonka Resolution No. 2020-026 JOINT RESOLUTION REQUESTING CONCURRENT DETACHMENT FROM MINNETONKA AND ANNEXATION TO HOPKINS OF CERTAIN LANDS PURSUANT TO MINNESOTA STATUTES SECTION 414.061 WHEREAS, certain real property, approximately 0.46 acres in size, legally described and depicted on Exhibit A attached hereto and incorporated herein and depicted on the survey thereof attached hereto and incorporated herein as Exhibit A (the “Annexation Property”) is located in the City of Minnetonka; and WHEREAS, the city of Minnetonka desires to transfer this property into the city of Hopkins in a “land swap” between the two cities; and WHEREAS, the Annexation Property has a street address of 11524 Excelsior Blvd., Minnetonka, MN and a tax parcel number of 23-117-22-44-0160; and WHEREAS, the City of Minnetonka and the City of Hopkins desire to detach the Annexation Property from Minnetonka and annexing the Annexation Property to Hopkins; and WHEREAS, the City of Minnetonka and the City of Hopkins desire to modify their respective boundaries by detaching the Annexation Property from the City of Minnetonka and annexing the Annexation Property to the City of Hopkins pursuant to Minnesota Statutes Section 414.061. NOW, THEREFORE, BE IT RESOLVED: 1. The City of Hopkins and the City of Minnetonka jointly request that the Office of Administrative Hearings – Municipal Boundary Adjustment concurrently detach the Annexation Property from the City of Minnetonka and annex the same to the City of Hopkins at the earliest possible date. 2. The city clerk for each city is directed to submit this Joint Resolution to the Office of Administrative Hearings – Municipal Boundary Adjustments for the purposes set forth herein. 3. The City of Hopkins and the City of Minnetonka agree that, within 30 days of receipt of this Resolution, passed and adopted by each party, the Office of Administrative Hearings – Municipal Boundary Adjustments, may review and comment, but shall order the concurrent detachment and annexation consistent with the terms of this Resolution. 4. The City of Minnetonka is responsible for all costs associated with processing this Resolution, including reimbursement of reasonable attorney’s fees incurred by the City of Hopkins. 5. The City of Minnetonka and City of Hopkins will not submit this Resolution to the Office of Administrative Hearings – Municipal Boundary Adjustments until the City of Minnetonka has granted final land use and financing approvals for the Shady Oak Crossings residential development project. 6. This Resolution is conditioned upon approval of the concurrent detachment/annexation Resolution for the 2 Shady Oak Rd. property also requested by the city of Minnetonka and city of Hopkins. Adopted by the City Council of the City of Minnetonka on Feb. 24, 2020. ____________________________ Brad Wiersum, Mayor ATTEST: ______________________________ Becky Koosman, City Clerk Action on this resolution: Motion for adoption: Kirk Seconded by: Schack Voted in favor of: Kirk, Schack, Carter, Calvert, Schaeppi, Coakley, Wiersum Voted against: Abstained: Absent: Resolution adopted. I hereby certify that the foregoing is a true and correct copy of a resolution adopted by the City Council of the City of Minnetonka at a meeting held on Feb. 24, 2020. ______________________________ Becky Koosman, City Clerk (Seal) Passed and adopted by the City Council of the City of Hopkins on the ___ day of _____________, 2020. ___________________________ Jason Gadd, Mayor ATTEST: ______________________________ Amy Domeier, City Clerk CERTIFICATION The undersigned, being the duly qualified Clerk of the City of Hopkins, hereby certifies the foregoing Resolution No. _____ is a true and correct copy of a resolution presented to and adopted by the Council of the City of Hopkins at a duly authorized meeting thereof held on the ____ day of __________, 2020, as shown by the minutes of the aforesaid meeting in possession of the undersigned. ______________________________ Amy Domeier, City Clerk (Seal) EXHIBIT A All that part of the following described portion of the Southeast Quarter of the Southeast Quarter of Section 23, Township 117, Range 22, lying west of a line drawn parallel with and 1165.2 feet measured at right angles from the east line of said Southeast Quarter of Southeast Quarter and lying south of the north 263 feet of said portion, which portion is bounded and described as follows: Beginning at a point where the northerly line of the abandoned right-of-way of the Chicago, Milwaukee & St. Paul Railway Company (later leased to and occupied by the Minneapolis, St. Paul & Suburban Railroad Company) as said right- of-way was located and constructed across said Southeast Quarter of Southeast Quarter of said Section 23, is intersected by a line parallel with and 660 feet West, measured at right angles from the East line of said Southeast Quarter of Southeast Quarter of said Section 23, running thence North on said parallel line 310.3 feet; thence West at right angles 366.8 feet to the actual point of beginning of the land to be described; thence continuing West on said last described right angle line 306.8 feet, more or less to the West line of said Southeast Quarter of Southeast Quarter of Section 23, thence South on said West line 358.2 feet, more or less to said northerly line of right-of-way; thence Easterly along said right-of-way line to its intersection with a line drawn parallel with and 1026.8 feet West from the East line of said Southeast Quarter; thence North parallel with said East line to the actual point of beginning. SHADY OAK R O A D / C O . R D . 6 1 BOUNDARY DESCRIPTIONCONFLICTBOUNDARYDESCRIPTIONCONFLICTBOUNDARY DESCRIPTIONCONFLICTREMAINDER PARCEL AREA: 19,047 S.F. (0.437 AC.) PURCHASE PARCELAREA (EXCLUDING ROW): 15,829 S.F. (0.363 AC.)P U R C H A S E P A R C E L A R E A I N R O W : 6 , 0 5 9 S . F . ( 0 . 1 3 9 A C . )PARCEL SPLIT EXHIBITLEGEND TO: Geralyn Barone, City Manager FROM: Julie Wischnack, AICP, Community Development Director DATE: Jan. 16, 2020 SUBJECT: Shady Oak Crossings – City of Hopkins request for joint resolution. This memo is in response to questions raised at the Jan.14, 2020 Hopkins City Council Study Session regarding the city of Minnetonka’s request for detachment from Hopkins and annexation to Minnetonka of property abutting the proposed plat and residential development known as Shady Oak Crossings. Site Access/Building Movement There were several questions relating to the building location and the size of the remaining parcel. There was a discussion about moving the building to the north. The developer indicated while movement is somewhat feasible, there is no change to the proposed parcel boundaries (annexation area) as the road access cannot move - as it must align with the existing Main Street and Shady Oak Road intersection and stoplight. The existing turn lanes and through street lane alignments are set and cannot be changed. See additional attached information. Alignment of City Boundary (straight vs. curved) The developer, who has an active purchase agreement with the subject parcel, has met with the property owner again about this issue and the property owner will not change the proposed boundary. The reasoning is the boundary is clearly defined by the proposed access road curb lines with the project so that maintenance of the access road is easily understood and not confusing in the physical environment realm. The second issue for the property owner is the area west of the curved annexation line is the truck turning movement area for the south building, again addressing maintenance and contemplated property ownership. Compensation for Annexation The City of Minnetonka proposes an upfront payment of $74,000 for potential lost tax revenue. The upfront payment, if invested with a 4% rate of return over 7 years (modeling how taxes are collected), equals $85,575.73. The point is there is an added benefit of an upfront payment rather than an annual payment (i.e. present value). The justification for this amount is based upon the potential loss of the city portion of local property taxes that Hopkins would not receive due to the annexation. The current 2019 estimated market value of the entire parcel located at 2 Shady Oak Rd is $225,000. The total tax in 2019 is $6,846.56, the city portion of the taxes on the entire parcel is $1,800. A potential housing development on the northern portion of the property could result in approximately $14,000 per year in tax revenue. There is existing property tax flow from the parcel remaining. During the discussion of the payment, Hopkins asked about the time frame in which the payments are calculated. Below is a reference point that is used in township/city annexation documents and informed the payment proposal, although it’s not required in city/city annexation/detachment proceedings. Parcel Exchange – Alternatives The Hopkins City Council also discussed a potential parcel exchange as compensation for the annexation. This would make the tax payments in perpetuity. Minnetonka is proposing the option of exchanging one of the following properties to address that issue: • 4548 Shady Oak Road – Gas Station o .74 Acres o Total tax in 2019 = $34,048 o City portion of taxes $4,459 • 4540 Shady Oak Road combined with 11651 Bradford – Domino’s o .44 Acres o Total tax in 2019 = $7,823 o City portion of taxes = $1,232 • 11524 Excelsior Blvd - Subway o .47 Acres o Total tax in 2019 = $19,777.86 o City portion of taxes = $2,623.78 Draft Resolution The draft resolution reflects other matters discussed at the meeting and is attached. The detachment/annexation would not occur if the project does not move forward. Attachments: • Draft detachment resolution