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Mayor Roe called to order the Roseville City Council regular meeting at approximately 6:00 pm and welcomed everyone. (Voting and Seating Order for June: Johnson; Pust; Willmus; McGehee; and Roe). City Attorney Mark Gaughan was also present.
2. Approve Agenda
Mayor Roe noted staff's request for removal of Agenda Item 12.c entitled, "Consider Accepting a Livable Housing Incentives Account Grant for Sienna Green II and enter into a Memorandum of Understanding with AEON;" and deferral to next week's agenda.
Willmus moved, Johnson seconded, approval of the agenda as amended.
Ayes: Johnson; Pust; Willmus; McGehee and Roe.
Nays: None.
Mayor Roe called for public comment by members of the audience on any non-agenda items.
a. James Anderson, 3004 Arona Street
Mr. Anderson referenced an e-mail he had sent to Councilmembers dated February 27, 2011, and provided a duplicate copy to City Manager Malinen related to ongoing issues with an adjacent neighbor throwing snow not only in his yard but against the siding of his house. Mr. Anderson sought amendment to City Code so snow could not be thrown more than five feet (5') onto an adjacent property. Mr. Anderson expressed his frustration that he had not heard from Councilmembers, individually or as a body, even though he spoke approximately six (6) weeks later during public comment at a City Council meeting. Mr. Anderson expressed his concern with damages to his siding, in addition to additional snow leading to potential leakage in his basement.
Mayor Roe recalled Mr. Anderson's e-mail and appearance, and the Council's direction to look into the matter and review City ordinance for any recourse; however, he apologized that there was apparently no follow-up and for the length of time in providing a response to Mr. Anderson. Mayor Roe assured Mr. Anderson that the matter would receive attention for follow-up.
Councilmember McGehee sought a response from City Planner Paschke, who was in the audience (off microphone) regarding City Code provisions; with Mr. Paschke advising current City Code would provide no recourse for Mr. Anderson's issue.
Councilmember Willmus suggested that consideration be given, and opined that, in some situations, it was not necessary for the City to get involved; but private issues between property owners should be handled as such.
Mr. Anderson advised that he had spoken with the City's Permit Coordinator Don Munson, who advised him that there was nothing in City Code preventing the neighbor from throwing snow into Mr. Anderson's yard; and his only recourse was through civil action through the courts. Mr. Anderson alluded to other issues with the neighbor, and the neighbor's contact of the City's Police Department with allegations against Mr. Anderson.
Councilmember McGehee opined that the matter should be looked into; and further opined that the only recourse for residents should not be through court. Councilmember McGehee opined that Mr. Anderson had a valid point in attempting to avoid having things thrown in his yard by others.
Mr. Anderson advised that there had been a recent altercation between the neighbor and him; and he was in the process of obtaining a "No Contact Order" against this neighbor to avoid additional altercations.
Councilmember Pust expressed her empathy for Mr. Anderson and his situation; noting that the City Council was only hearing one side of the situation. Councilmember Pust noted that the City Council was a legislative body; and that this was the first time that she is aware of that a citizen had not been able to resolve a snow removal situation. Councilmember Pust suggested that, if there were repeat situations, there needed to be resolution, and that the court system was there to resolve such situations. However, Councilmember Pust opined that changing City ordinance based on one incident, requiring additional time for police enforcement, didn't seem prudent. Councilmember Pust apologized that the City Council did not get back to Mr. Anderson sooner, opining that responding to citizens was part of the City Council's job.
Mayor Roe thanked Mr. Anderson for his attendance at tonight's meeting and for his patience; and advised that City Manager Malinen had recorded Mr. Anderson's information, and would be following-through with him.
City Manager Malinen concurred; noting that he would talk among Department Heads at their Tuesday morning meeting and copy the City Council on their recommended course of action for Mr. Anderson.
4. Council Communications, Reports and Announcements
Councilmember Pust noted an upcoming Public Hearing (Wednesday, June 15, 2011) before the Metropolitan Council, with one of their agenda items being a discussion about potential reductions in bus service impacting the Roseville area. Councilmember Pust suggested interested people look for additional information on the Metropolitan Council's website; and if interested appear to discuss the issue. Councilmember Pust noted that, while this is short notice, she understood additional public meetings were planned throughout the affected areas; and opined that this was an important issue for community awareness.
Mayor Roe advised that the 2nd organizational meeting for the Beyond the Yellow Ribbon initiative had been held; and now the first meeting of the working committee was scheduled for Tuesday, June 21, 1022 at 7:00 p.m. at the Roseville Skating Center, and was open to the public to attend to gather additional information, or to become involved.
Mayor Roe noted the Planning Commission's Public Hearing on the Twin Lakes Regulating Map scheduled on Wednesday, June 15, 2011 at 6:30 p.m. in the City Hall Council Chambers.
5. Recognitions, Donations, Communications
6. Approve Minutes
a. Approve Minutes of May 23, 2011 Meeting
Comments and corrections to draft minutes had been submitted by the City Council prior to tonight's meeting and those revisions were incorporated into the draft presented in the Council packet.
Johnson moved, Willmus seconded, approval of the minutes of the May 23, 2011 meeting as amended.
Ayes: Johnson; Pust; Willmus; McGehee; and Roe.
7. Approve Consent Agenda
There were no additional changes to the Consent Agenda than those previously noted. At the request of Mayor Roe, City Manager Bill Malinen briefly reviewed those items being considered under the Consent Agenda.
a. Approve Payments
Johnson moved, Pust seconded, approval of the following claims and payments as presented.
ACH Payments
b. Approve Business Licenses
Johnson moved, Pust seconded, approval of business license applications for the period of one (1) year, for those applicants as detailed in the RCA dated June 13, 2011.
c. Approve General Purchases and Sale of Surplus Items Exceeding $5,000
Mayor Roe noted the annual cost savings projected through the purchase of this new equipment as detailed in the RCA, and commended staff for their initiative.
Johnson moved, Pust seconded, approval of the submitted list of general purchases and contracts for services presented as follows:
Item/Description
CDWG
d. Set Deadline for Applications for Human Rights Commission
At the request of Councilmember Johnson, City Manager Malinen confirmed that there were seven (7) members total on the Human Rights Commission.
Johnson moved, Pust seconded, directing staff to advertise for applications for service on the Human Rights Commission, with applications due to the City by July 15, 2011; and interview scheduled by the City Council at their July 25, 2011 meeting ; and appointments to be made at the August 8, 2011 meeting.
e. Set Deadline for Applications for Housing and Redevelopment Authority
Councilmember McGehee pointed out, in the HRA Policy Statement related to pursuing affordable housing, as contained in the resolution attached to the RCA; and wanted that noted for the record for future discussion, opining that the City already had considerable affordable housing available.
Johnson moved, Pust seconded, directing staff to advertise for applications for service on the Housing and Redevelopment Authority, with applications due to the City by July 15, 2011; and interview scheduled by the City Council at their July 25, 2011 meeting; and appointments to be made at the August 8, 2011 meeting.
f. Adopt a Resolution Approving a Drive-through as a Conditional use at 2750 Snelling Avenue
Councilmember McGehee referenced her e-mail to the Planning Commission for their June 1, 2011 Public Hearing on this issue, and concerns brought to her attention by a developer about placement of the building in consideration of pedestrian-friendly design standards. Councilmember McGehee expressed her astonishment in receiving a response to that e-mail from City Planner Thomas Paschke, opining that he was basically restating his argument already made in the staff report. Councilmember McGehee expressed her annoyance in receiving a staff response to an e-mail sent directly to Planning Commissioners; and opined that this was not an isolated incident and that the Planning Commission should be able to operate without "heavy-handed" staff comments.
Johnson moved, Pust seconded, adoption of Resolution No. 10906 (Attachment E) entitled, "A Resolution Approving a Drive Through as a Conditional Use at 2750 Snelling Avenue (PF11-015)."
g. Accept the Office of Traffic Safety Grant Award of One (1) Panasonic Arbitrator 360 In-squad Camera
Councilmember McGehee questioned if there were matching funds of $1,300.00 required for the camera previously received through this grant.
City Manager Malinen was unable to respond at this time, but volunteered to obtain that information.
Mayor Roe asked whether under the "financial impacts" portion of the RCA, the cameras were not programmed for replacement by the City, but through future grant funding only.
City Manager Malinen and Mayor Roe volunteered to review their records on this issue and the original grant award to respond about matching City funds.
Johnson moved, Pust seconded, acceptance of the Office of Traffic Safety Grant award of one (1) Panasonic Arbitrator 360 in-squad camera; as detailed in Attachment A and total costs detailed in Attachment B.
8. Consider Items Removed from Consent
9. General Ordinances for Adoption
a. Consider an Ordinance Adding Chapter 410 Title Four of the Roseville City Code Regulating the Use of Coal Tar Based Sealer Products
Public Works Director Duane Schwartz briefly summarized this item as detailed in the RCA dated June 13, 2011; and as introduced in a previous Council meeting and receiving enthusiastic support of the City Council. Mr. Schwartz advised that this would be more of an educational, rather than enforcement, item; and was strongly supported and recommended by the City's Public Works, Environment, and Transportation Commission (PWET).
Pust moved, Johnson seconded, enactment of Ordinance No. 1409 (Attachment A) entitled, "An Ordinance Adding Chapter 410 to Title Four of the Roseville City Code Regulating the Use of Coal Tar-Based Sealer Products within the City of Roseville, MN, as amended – lines 58 – 70;" and enactment of Ordinance Summary No. 1409 (Attachment B) entitled, "Summary of An Ordinance Amending Title Four, Adding Chapter 410, Coal Tar Sealants"
Mayor Roe noted that an Ordinance Summary for publication requires a super-majority vote.
Councilmember McGehee questioned why the City didn't prohibit sale of coal-tar products in the City of Roseville, rather than having a long, involved process for people to get a permit.
Mr. Schwartz advised that such a prohibition would be difficult for staff to enforce, as the product was not generally available for sale any longer over the counter; but the product was still used by door-to-door vendors buying directly from their distributors. Mr. Schwartz advised that this determination was based on research done by other cities as well as Roseville.
Councilmember McGehee suggested that this information be published in the City's newsletter; which was duly noted by City Manager Malinen.
Mayor Roe suggested an amendment to Page 2, Section 410.03 (Prohibitions), lines 58 – 70, Item D.2.f; making Item f a separate Item #3.
Councilmembers and staff concurred; and Councilmember Pust accepted Mayor Roe's suggestion as a friendly amendment to her original motion.
Mayor Roe thanked the City's PWET Commission for their research, work in drafting an ordinance, and for their subsequent recommendation.
b. Consider an Ordinance Amending Title 7, Chapter 706, Forestation Control (now Urban Forest Management) and Title 2, Chapter 203.04, Duties and Functions of the Parks and Recreation Commission Amending Forestation Control
Parks and Recreation Director Lonnie Brokke summarized the proposed ordinance, as revised since the last hearing before the City Council, and as detailed in the RCA dated June 13, 2011.
Discussion included responsibility for upkeep of trees and plants on public rights-of-way (e.g. boulevards), with clarification that plantings could be done with City approval and permitting, but not without that approval.
Pust moved, Willmus seconded, enactment of Ordinance No. 1410 (Attachment A) entitled, "An Ordinance Amending Title 7, Chapter 706, Forestation Control (Now Urban Forest Management) and Title 2, Section 203.04, Duties and Functions of the Parks and Recreation Commission;" and enactment of Ordinance Summary No. 1410 (Attachment B, entitled, Amending Title 7, Chapter 706, Forestation Control (Now Urban Forest Management) and Title 2, Section 203.04, Duties and Functions of the Parks and Recreation Commission."
Councilmember Johnson questioned if any Emerald Ash Borers had been found in Roseville; with Mr. Brokke responding negatively.
Councilmember Pust questioned the status of the tree inventory/survey; with Mr. Brokke responding that the data had been entered into the software program, and would be presented in one to two months.
c. Consider an Ordinance Amending Zoning Text in Chapter 1004 and 1006 of the Roseville City Code Pertaining to Front Porch and Covered Entries in the LDR-1 District; and Parking Setbacks in Employment Districts
City Planner Thomas Paschke briefly summarized the proposed zoning text amendments as detailed in the RCA dated June 13, 2011.
Councilmember McGehee questioned zero setbacks for parking setbacks.
Mr. Paschke advised that this related to shared parking areas; however, there would be sufficient rationale needed for such a request to be granted.
Mayor Roe clarified, as detailed in the staff report that the standard didn't go to zero feet in every situation.
Mr. Paschke concurred with Mayor Roe's clarification; noting that it depended on the type of development projects; but that the standard remained 5' or 40' as indicated.
Councilmember McGehee questioned the courtyard situation, seeking a visual sketch or better description for her understanding; questioning if properties faced each other and with the new porch setback was applied, would there be only 8' separating the properties; and how that may impact drainage or impervious coverage.
Mr. Paschke advised that the illustration in code was just illustrative; and the reduced setback may be possible, but not probable. Mr. Paschke noted that code requirements related to drainage would need to be addressed for any development, whether further encroachment was allowed or not.
Councilmember McGehee opined that it seems that the City had reduced setbacks considerably, and now was doing so again, potentially having a porch located 4' from a property line, barely the width of a wide sidewalk; opining that it seemed like an odd thing to deal with in code.
Mr. Paschke displayed a generic courtyard building arrangement illustration, noting the lot area, and courtyard area; and depending on size and design of structures, he didn't see any further encroachment into the courtyard.
Johnson moved, Willmus seconded, enactment of Ordinance No. 1411 (Attachment A) entitled, "An Ordinance Amending Selected Text of Title 10 (Zoning Code) of the City Code;" and enactment of Ordinance Summary No. 1411 (Attachment B) entitled, "An Ordinance Amending Selected Text of Title 10, 'Zoning Code," including Amendments in Section 1004.08B (LDR-1 District Dimensional Standards); Section 1004.09B (LDR-2 District Dimensional Standards); Section 1006.04C (O/BP District Dimensional Standards); and Section 1006.05C (I District Dimensional Standards) of the City Code."
10. Presentations
a. Joint Meeting with the Public Works, Environment and Transportation Commission
Chair James DeBenedet; and Commissioners Dwayne Stenlund and Steve Gjerdingen. Chair DeBenedet advised that Members Joan Felice and Jan Vanderwall were unable to attend tonight.
Chair DeBenedet reviewed the past year's accomplishments and work-to-date, as detailed on the agenda included in the RCA dated June 13, 2011.
Related to Organized Solid Waste Collection Discussions (Item 1.e), Chair DeBenedet advised that the PWET Commission was proceeding deliberately to determine if refuse hauler trucks are having a major impact on city roadways; and noted that the research was continuing.
Chair DeBenedet expressed the Commission's appreciation to the City Council for their support and in their adoption of the Coal Tar Sealant Ban Ordinance and Forestry Ordinance Update earlier tonight, helping to validate the work of the PWET Commission, its research and recommendations.
Member Stenlund expressed his appreciation for the Commission's rewarding and informative field trip when reviewing intersections in the community to gain that personal perspective.
Discussion among Commissioners and Councilmembers included various Erosion Control Update Ordinance, Illicit Discharge based on the MPCA Audit of the City's MS4 Ordinance and recommended permits; and development of further policies based on goals of the Comprehensive Plan for storm water management and tree preservation.
Member Stenlund noted that the PWET Commission was still educating themselves about the Complete Streets concept; minimum impact design standards for stormwater collection by trees through a livable root system; and referenced a very informative presentation by Randy Neprash with Bonestroo on international opportunities for urban tree growth and growth along roadways, specifically those being done in Stockholm, Sweden based on their similar cold climates to that of MN.
Chair DeBenedet noted that another benefit of that research was having a better understanding that trees planted in boulevards reach a limited maturity as the soil around their root area is compacted and dry and does not provide a supportive environment for their longer maturity and survival. Chair DeBenedet advised that, in initial PWET Commission discussions, they were considering offering a tool kit for developers as an alternative that may help and provide guidance for the City in some manner as areas of the community are redeveloped, such as Twin Lakes that had used some more innovative stormwater drainage practices based on prompting from the PWET Commission.
Councilmember McGehee questioned large parking lots with high curbs around islands draining into the parking lot rather than through the island. Councilmember McGehee also questioned the depth of free soil for tree roots in standard parking lots to facilitate their growth.
Member Stenlund advised that there was as much need for tree growth below ground as above ground, and when you restrict that root growth, you restrict the tree's longevity considerably. Member Stenlund noted that the proposal of the Stockholm and Helsinki studies was to create a structural roadway that allowed tree roots to expand underground through interaction between water and trees, while still providing roadways that served the various transit modes sufficiently. Member Stenlund advised that the roots usually end up between the bituminous and soil, seeking water and air; with most tree roots located in the top twelve inches, thus creating heaves in roadways and sidewalks. Member Stenlund advised that the original Stockholm study was initiated through the discovery of tree roots finding space to grow under old bunkers in Germany.
Mayor Roe suggested that the additional root strength may help trees survive storms as well.
Councilmember Pust clarified that it was recommended to have as much space for a tree below ground as above ground.
Member Stenlund responded affirmatively, noting that the biomass underground should support a fifty year old tree; but from an engineering perspective, the road and sidewalk amenities needed to also provide structural pavement for vehicle needs and safety concerns.
Member Gjerdingen advised that it was good to educate the Commission and residents on how close trees should be planted in boulevards in order to allow sufficient root space; noting that the Commission saw some great examples on structural soils during the Neprash presentation.
Member Stenlund opined that expense was relative for some of the new technologies for storm water management, since ponds and other storm water management options cost money to construct, maintain and reconstruct as well.
Member Stenlund noted the advantages in the PWET Commission being able to provide input for new developments, such as the Josephine Woods plat, and opportunities to blend homes into existing topography in order to save trees rather than replace them.
Chair DeBenedet reviewed potential 2011/12 PWET Commission Topics and a proposed work plan; and reviewed the status of the various items as detailed in the RCA. Chair DeBenedet noted the PWET Commission's interest in meeting jointly with the City's Parks and Recreation Commission in reviewing pathway planning/implementation, incorporating the Imagine Roseville 2025 and Comprehensive Plan update, and discussing them from a Public Works and Parks perspective.
Councilmember Willmus noted the need to incorporate the Parks and Recreation Master Plan process.
Member Gjerdingen noted the need to review the Parks and Recreation constellations and how to tie them together with the Pathway Master Plan.
Chair DeBenedet noted the Commission's interest in pursuing community volunteers to implement projects or initiatives; with Member Stenlund suggesting lakeshore stabilization projects as an example and one with which he was familiar based on past Eagle Scout projects. Chair DeBenedet concurred, noting that many low impact storm water and erosion control projects needed people, not heavy equipment.
Related to the PWET Commission's conservation review of stormwater management practices, Mayor Roe asked that, as part of that study, the Commission considers ways to incent certain types of approaches in the overall regulating scheme, such as demonstration ideas needing to be evolved.
Councilmember McGehee expressed her favorable impression with the Josephine Woods development project, and complimented the Commission if they had any input in that project. Councilmember McGehee expressed her interest in a presentation at the City Council level on the Helsinki and Stockholm tree options.
Councilmember Johnson expressed his appreciation of the Commission's discussion on asset management; and tied that into the current work of the CIP Task Force and budget concerns, specifically the funding deficit over the next 10 - 2 0 years. Councilmember Johnson noted that a lot had to do with the City Council's strategy from a business standpoint in managing that deficit. Councilmember Johnson advised that input from the Commission on items such as whether the current practice for paving streets needed to be continued, or if dropping down a level or deferring that reconstruction was financially advantageous or would have a downside and the current schedule continued. Councilmember Johnson requested that type of study by the Commission to help the City Council get a better handle on practical cuts or overall, long-term cost savings by more frequent reconstruction and/or maintenance; or where assets were maximized out. In dealing with the CIP assets, Councilmember Johnson advised that there was nothing on their list that didn't somehow involve the PWET Commission; and welcomed input from and a close working relationship with the Commission to maximize the CIP Plan and make a bold effort to get that back on track.
Mayor Roe spoke in support of the track being undertaken by the Commission on asset management techniques and from a CIP perspective, how to manage streets and other City infrastructure; in addition to review of the current Assessment Policy.
Councilmember Willmus echoed comments of his colleagues; and supported the work that the Commission was undertaking for organized solid waste collection and determining the real impacts, and other studies that will provide guidance to the City. Councilmember Willmus advised that he looked forward to hearing the PWET Commission discussion and their future recommendations.
Councilmember Pust opined that any members of the public listening to this discussion, would be impressed with the level of review performed by the PWET Commission, and asked the Chair for their meeting schedule for public information.
Chair DeBenedet noted that the PWET Commission met the fourth Tuesday of each month in the City Hall Council chambers at 6:30 p.m.
Mayor Roe noted tonight's discussion as an example of the rationale for and value of volunteer advisory commissions to assist the City Council; and expressed his personal appreciation for their time and input. Mayor Roe reiterated that those items listed by the PWET Commission as topics for their 2011/2012 work plan were right on track and in line with the City Council's own work plan and areas of concern.
At the request of Member Stenlund on anything else on the City Council's radar that the PWET Commission should be aware of, Mayor Roe opined that the Neighborhood Traffic Management Policy review was a very high priority.
Councilmember Johnson asked that, in their study of traffic management options, the PWET Commission also consider crosswalks, especially those on larger roads with multiple lanes and right-turning traffic, and visual/safety concerns.
Member Stenlund noted, from his experience, the difficulty in solving those concerns, when dealing with fractured communities and landscapes and the blurring of community lines; while attempting to maintain traffic flow and keep pedestrians safe. Member Stenlund noted the need for safe oasis for everyone to get across, since not everyone can cross a wide street with multiple lanes in one signal light change, and the need to accommodate those pedestrians.
Mayor Roe concurred, noting that drivers were not necessarily doing what they needed to do to ensure pedestrian safety, especially before turning right; and the need to be conscious of how you were driving and the reason for rules of the road for vehicles, pedestrians, and bicycles.
Further discussion on neighborhood traffic management included options, such as speed humps and pedestrian crosswalks; traffic speed through residential neighborhoods; pros and cons of closures of neighborhood roads to eliminate cut-through traffic.
Councilmember Willmus opined that everyone needed to be cognizant as a first-ring suburb in the number of vehicles, pedestrians and bicycles now and in the future; not to restrict them but to move them more efficiently and safely.
Mayor Roe opined that the policy discussion needed to identify consistent criteria, when it was appropriate to close a road as a solution; and what conditions or standards were applied consistently for those types of decisions, not just responding to passionate citizen input, but based on best practices. Mayor Roe looked to the PWET Commission to point the City and City Council in the right direction.
11. Public Hearings
a. Conduct a Public Hearing for a Variance to the Noise Ordinance to Extend Construction Activity Hours at the Rosedale Square Shopping Center
Permit Coordinator Don Munson briefly summarized the request as detailed in the RCA dated June 13, 2011. Mr. Munson advised that mailed notices of tonight's Public Hearing were provided to properties within 500' of the site; but to-date, staff had received no phone calls. Mr. Munson advised that representatives from Welsh Companies, the applicant, and Minnesota Roadways, the contractor, were in the audience and available for questions as applicable.
Mayor Roe opened the Public Hearing at 7:29 p.m. for the purpose of hearing public comment on the request for a variance to the City's Noise Ordinance to extend construction activity hours at Rosedale Square Shopping Center, 1601 – 1675 County Road C, in order to perform an asphalt overlay on the south half of the parking lot.
Mayor Roe closed the Public Hearing at 7:30 p.m.; with no one appearing for or against.
12. Business Items (Action Items)
a. Consider Request for a Variance to the Noise Ordinance to Extend Construction Activity Hours at the Rosedale Square Shopping Center
Johnson moved, Pust seconded, adoption of Resolution No. 10907 (Attachment C) entitled, "Resolution Requesting a Variance from City Code, Section 405.03, Hourly Restrictions on Certain Operations for Rosedale Square Shopping Center, 1601-1675 County Road C."
b. Conduct a Public Hearing Regarding an Amendment to TIF District #18 Plan and Development District #1
Community Development Director Patrick Trudgeon briefly summarized the request as detailed in the RCA dated June 13, 2011. Mr. Trudgeon advised that and introduced Ms. Mikaela Huot with Springsted Incorporated, the City's financial consultant, to answer questions as applicable. Mr. Trudgeon advised that representatives of Sienna Green were also in the audience and available for questions.
Mr. Trudgeon noted that the proposed amendments were minor and being requested due to the recent acquisition of the triangle parcel; increased value of Phase I of the project; and the financial gap for Phase II determined to be a maximum of $935,005. Mr. Trudgeon reviewed the two (2) requested actions currently before the City Council; advising that the TIF Development Agreement was anticipated for presentation tonight, but as previously noted, had been deferred to next week's meeting to allow finalization of several remaining items. Mr. Trudgeon advised that the TIF would be "pay-as-you-go," with no bonding requested; and advised that the TIF Plan provided a framework for the funding, but that no money would be authorized until the City Council approved the Development Agreement.
Mayor Roe clarified that the District remained in effect and generating TIF dollars at this time, whether amended or not. Mayor Roe further clarified that the ability of the TIF District to fill the gap requirement was still there, and had not changed.
Mr. Trudgeon responded affirmatively to both statements of Mayor Roe, noting that the TIF District had originally been created to provide assistance for new development, not to remain stagnant.
At the request of Councilmember McGehee, Mr. Trudgeon reviewed those items being amended, as underlined, such as in Section K, providing for a new budget between the original and modified plan shifting those resources for potential generation of funds, since Phase I values came in higher than originally planned.
Mayor Roe opened the Public Hearing at 7:38 p.m. for the purpose of hearing public comment of an Amendment to the TIF District #18 Plan and Development District #1; as requested by AEON, owners of the Sienna Green Apartment for consideration of establishing a housing tax increment financing (TIF) District on their parcel in order to fill a projected financial gap in the second phase of their initiative to revitalize this aging apartment property.
Charles Kelly, resident of Rosewood Village
Mr. Kelly asked that the entire process be slowed down; expressing concern with parking at Sienna Green; and his personal review of an average of fifteen (15) cars parking overnight each night on both sides of the frontage road. Mr. Kelly alleged that there were too few parking spots for the number of units; and he requested improvement or a solution to parking issues in that area. Mr. Kelly referenced the green space on Rosewood Village property being used to get a variance to put the Sienna Green building closer to the property line. Mr. Kelly expressed concern as the property became fully developed and occupied, that the parking situation would only become more pronounced.
Dick Houck, 1131 Roselawn
Mr. Houck questioned, based on the current real estate market and economy, the justification for the City assisting in building another fifty (50) units in the City. Mr. Houck opined that it didn't seem like the right time to put city funds into more units when there were already so many vacancies in the area; and he didn't understand the justification at this time.
With no one else coming forward to speak, Mayor Roe closed the Public Hearing at 7:42 p.m.
Mayor Roe asked Mr. Trudgeon to address parking and building location issues raised during public comment; and Councilmember Willmus asked Mr. Trudgeon to address parking ratios per unit.
Mr. Trudgeon advised that, typically, ratios were at least one spot per unit; but in this case the site was already developed and approved under previous City ordinance as a PUD. Mr. Trudgeon advised that staff looked at the parking situation and conducted a study on trends and the tenant mix that was provided to the City Council at the time of the PUD approval; and it was determined that what was providing for parking for a redevelopment was sufficient for current and future needs. Mr. Trudgeon advised that, if in the future, there were any issues with parking, there were additional areas available on the site that were not currently being used or needed for parking, but available if that need should arise. Mr. Trudgeon noted that the street did allow for parking at this time, for overflow parking; and advised that if this created a safety hazard now or in the future, it could be investigated. Mr. Trudgeon noted that there were cut outs along the road as part of the project and away from the main travel surface. Mr. Trudgeon further advised that City staff, and Sienna Green management staff, would be happy to work cooperatively to educate residents to park in the parking lot as needed; opining that he was not sure if there wasn't room in the parking lot that would negate the need for on-street parking; but that such an assumption would require additional research.
Councilmember Willmus questioned if the future parking areas were part of the green space calculations, to which Mr. Trudgeon responded affirmatively.
Mayor Roe noted that proof of parking took into consideration additional parking above and beyond that minimum; and asked that staff provide that additional information next week as part of the TIF Agreement discussion.
At the request of Mayor Roe, Mr. Trudgeon confirmed that the new building was not any closer to the property line, but met City Code with no variances requested or granted.
b. Consider a Resolution Approving Amendment to TIF District #18 Plan and Development District #1
Willmus moved, Johnson seconded, adoption of Resolution No. 10908 (Attachment C) entitled, "Resolution Approving the Modification to the Development Program for Development District No. 1 (as detailed in Attachment B); and the Modification to the Tax Increment Financing Plan for Incrementing Financing District No. 18 (as detailed in Attachment A) Therein."
Councilmember McGehee advised that she had attended the Sienna Green Open House and was disappointed, opining that the City could do better with affordable housing, without building or rehabilitating apartment buildings when they were not handicap accessible and without sprinklers. Councilmember McGehee opined that this was short-sighted in this economy, and advised that she was not impressed with their cosmetic rehabilitation or available green space for children. Councilmember McGehee opined that this TIF District proposal was not a good use of public funds, when the money should be made available to residents of Roseville over the twenty-six (26) years, as pointed out by Mr. Houck during public comment. Councilmember McGehee opined that this project is in an area that could have entertained a newer apartment complex with appropriate parking and green space; and housed the same number of people and same type of housing; except that it would have been better and safer; and reiterated her disappointment from that standpoint.
Mr. Trudgeon clarified that TIF assistance was not being used in Phase I of the project, only for Phase II, which would have sprinklers and elevators. Mr. Trudgeon noted that Phase I was limited to things that could be accomplished in an existing building.
Councilmember McGehee reiterated her opinion that the rehabilitation of those buildings was not sufficient and had insufficient green space; and further opined that she would have preferred a new building with adequate parking and more common space.
Mayor Roe noted that, while differing opinions on the Council, he had been involved with the project since it was originally proposed; and respectfully noted AEON's objective to rehabilitate existing building to benefit the overall cost of a project and provide affordable housing. Mayor Roe advised that he had toured the building, and thought it had been very well done; and opined that he was impressed with the quality of the units, and their affordable and market rate mix. Mayor Roe noted that, given the occupancy rate of the rehabilitated apartments, he had the impression that residents were enjoying them as well. Mayor Roe opined that this was a good use of TIF funds to close a financial gap; and further opined that this was a good project.
Ayes: Johnson; Pust; Willmus; and Roe.
Nays: McGehee.
Motion carried.
c. Removed from Agenda (see Item #2, page 1)
d. Consider Appointing City Council Representative to Norwest Youth and Family Services (NYFS)
Councilmember Pust noted that she had been honored to serve on the NYFS Board for the last 5-6 years; opining that it was an excellent organization doing great work for families and children. Councilmember Pust noted that the organization was unique in that it had a contractual agreement with ten (10) northern suburban cities in Ramsey County. Councilmember Pust advised that she was stepping off the Board as she thought that too often, one person got to know an entity, when a broader knowledge was needed by a variety of Councilmembers.
Pust moved, Roe seconded, appointment of Councilmember Jeff Johnson as the City's representative to the Northwest Youth and Family Services Board of Directors.
At the request of Mayor Roe, Councilmember Johnson confirmed that he would be interested in serving on the NYFS Board of Directors.
Ayes: Pust; Willmus; McGehee; and Roe.
Abstentions: Johnson
While having no problem with the Council appointment, Mr. Houck questioned the annual funding by the City for this organization.
City Manager Malinen estimated at $40,000 to $50,000.00.
Mr. Houck questioned the justification for the City giving taxpayer funds to a private, non-profit organization when times are tight.
Councilmember Pust advised that this organization reported directly to the City of Roseville, and had done so over the last thirty (30) years; and provided family assistance, senior chore assistance, and youth training programs. Councilmember Pust advised that the School Districts also helped fund this non-profit, and one of their programs entitled NETS, provided non-traditional students with mental health services for their re-entry into the school system. Whether or not the government has a role in that, Councilmember Pust opined that families and communities were stronger and healthier.
Mr. Houck opined that he had no problem with their work; only with the City funding it. Mr. Houck advised that the County funded charitable works, but that the City was not in a position to give taxpayer monies to particular non-profits, when there were other non-profits doing equally good work who were not receiving any funding from the City.
Mayor Roe opined that this was a judgment made by City government over a number of years, and results that had been borne out as part of the annual NYFS report proved that it was providing good returns for the City's investment. Mayor Roe opined that the long-term benefits to the community were through the NYFS's intervention with youth to avoid them becoming career criminals.
Mr. Houck stated his position, and opined that the NYFS would get their funding whether the City participated or not.
Councilmember Pust understood Mr. Houck's position; however, clarified that the City did provide public funds to many other non-profits, with the North Suburban Community Foundation providing grants to numerous non-profits in the community. Councilmember Pust opined that the only thing unique was the way the NYFS came to the City for funding, but that they were not the only one getting public support.
Councilmember Johnson expressed his excitement in accepting the position on the NYFS Board; and appreciated Councilmember support; and noted that he looked forward to serving with an open heart.
Mayor Roe expressed his support for Councilmember Johnson serving in this role; opining that he would do an excellent job.
e. Consider Appointing City Council Representative to Arterial Transitway Corridors Study Stakeholder Workshop
Public Works Director Duane Schwartz briefly reviewed the request for elected official representation on this stakeholder group as detailed on the RCA dated June 13, 2011.
Discussion included the actual route locations; lack of definition for a northern transit center; arterial versus freeway rapid transit nature of this group; with Mayor Roe requesting that the City's representative voice the City's strong opinion for a connection from Central Avenue to Snelling Avenue and out east along County Road C.
Mayor Roe noted that Councilmember Pust had previously expressed an interest in serving on this group.
Councilmember Pust confirmed her interest in this topic; however, she advised that given the current flux of a potential state government shutdown, she was unable to firmly commit to attending the first meeting scheduled for June 30, 2011.
Councilmembers Willmus and McGehee advised that they would both be out of town that day.
Mayor Roe advised that he would be willing to serve as a back up to Councilmember Pust if no other Councilmembers were available or interested.
Johnson moved, Willmus seconded, appointment of Councilmember Tammy Pust as primary city-elected representative and Mayor Dan Roe as backup city-elected representative to the Metro Transit Arterial Transitway Corridors Study Stakeholder Workshop.
f. Review 2011 City Manager Goals
City Manager Malinen advised that he had worked with Councilmember Johnson to be more expansive on some of the goals listed; and in reviewing some of last year's goals and work plan objectives, and what was being done with internal operations, he had developed the list as presented for Council review and consideration.
Organizational and Human Resources Management (bullet point #3)
Mayor Roe asked if there was a measurement to "Pursue improved Labor/Management Relations?"
City Manger Malinen opined that while some may not be specifically measurable, but only continuing efforts; he could continue to show steps he had taken to achieve it or completion of it. Mr. Malinen noted that there had been a number of mediations and arbitrations lately, and he would like to avoid them; suggesting that perhaps demonstrable goals could be through fewer of those impasses; and sitting down more often or find other ways to work with union groups to avoid those situations.
Mayor Roe questioned if, under "Advocate further examination of e-commerce and e-government concepts" it was meant for the City Manager to look to advocate for examining e-commerce or to further the examination by staff? Mayor Roe suggested that the City Manger's role would be for "further the examination."
City Manager Malinen advised that part of what he did at his level, was to lead departments to explore doing things differently electronically and explore other ways of doing business.
Fiscal Business Management (bullet point #3)
Mayor Roe questioned how the performance measures that are continuing to evolve fit into "Pursue sustainable, long-range financial condition;" or whether that fit in better under Long Range Planning/Strategic Plan (bullet point #3 entitled, "Improve integration of strategic planning into the budget process?"
City Manager Malinen advised that, in terms of performance measurement, he wasn't sure if long-range was what he envisioned, and suggested it may be best to add "performance measurement" to either one; with his intent in including performance measurement as part of the budget process to understand cost/service ratios.
Mayor Roe suggested that a more applicable bullet point may be "Continue to integrate performance measurement into the budget process."
Councilmember Pust spoke in support of that concept; noting that the City Council had talked about the budget process for years and there was still a certain level of "we're not there yet." Councilmember Pust opined that the goal needed to be spelled out with the intent that "we're getting there," or removed from the list completely.
As part of that goal, and all of them for that matter, Councilmember Willmus requested more frequent reports from the City Manager to the City Council, similar to the quarterly staff reports.
Mayor Roe concurred, opining that it made sense to receive reports more frequently, similar to the quarterly reports from staff on the Imagine Roseville 2025 document.
Mayor Roe noted that Councilmember McGehee had provided her comments in writing to the City Council, attached hereto and made a part hereof. In referring to those written comments, Mayor Roe noted Councilmember McGehee's agreement with those items listed; but her concern that the list was hard to manage, and her preference for a report.
Councilmember McGehee opined that the City was facing some big issues, and she was not pleased with the way items were reported to the City Council in the City's government structure. Councilmember McGehee requested that the City Manager develop reports and provide more metrics through periodic reports to the City Council with ideas for long-range planning and budget issues, in addition to possible reorganization of the Community Development Department.
Councilmember Willmus expressed his preference for more frequent reporting; but wasn't sure whether reorganization of the Community Development Department was completely necessary without giving that more thought. Overall, Councilmember Willmus noted that some of those items listed by City Manager Malinen were obvious, while others have only been touched upon. Regarding quarterly reporting listed under long-range planning, Councilmember Willmus suggested that it be done for all categories, eliminating any obvious overlaps.
Councilmember Johnson opined that there were some things he could see needing more frequent reporting; however, items such as "relationship with the City Council;" "fiscal management;" and other items were dealt with at every City Council meeting. Regarding the City Council/City Manager relationship, and/or Public Relations/Intergovernmental Relations, Councilmember Johnson opined that it didn't warrant a quarterly or semi-annual report, but it was important to evaluate on an annual basis; with organizational items covered in the personal weekly meetings held between individual Councilmembers and City Manager Malinen, where items of concern were shared. Councilmember Johnson spoke in support of more frequent reporting for long-range planning.
Councilmember McGehee clarified that it was not her intention to require more frequent reporting on all items, mainly only for long-range planning, since she talked to City Manager Malinen individually about a lot of things. However, Councilmember McGehee noted that she had a friend in the City of Bloomington, and she didn't see any evidence of City Manager Malinen seeking out ideas from other cities outside the Ramsey County corridor communities, and suggested at least three (3) cities in her written comments with lots of commercial development that could provide useful initiatives for the City of Roseville, and suggested that some contacts be made there. Councilmember McGehee advised that she was seeking some kind of formulated report of policies to guide the City Council's direction in the future and how to implement a biennial budget.
Councilmember Johnson suggested the need to know what to expect next year in the biennial budget cycle.
Councilmember McGehee concurred, noting she wanted a timeline and markers for the biennial process to make it more measurable.
Mayor Roe suggested that Councilmember McGehee work with City Manager Malinen on refinement of the list, if the City Council was supportive of that, since Councilmember Johnson had originally served with former Mayor Klausing on the subcommittee for City Manager evaluations, and continued to serve in that capacity.
Councilmember Johnson suggested discussion of that committee on a future agenda.
Mayor Roe concurred; allowing for more time to reflect on City Manager Malinen's list, and tonight's discussion as well.
Consensus was that the refined 2011 City Manager Goals come back for further consideration, along with discussion on a subcommittee to facilitate City Manager evaluations.
Mayor Roe recessed the meeting at approximately 8:17 p.m. and reconvened at approximately 8:23 p.m.
13. Business Items – Presentations/Discussions
a. Partial Capital Funding Plan and Preliminary Subcommittee Report
The CIP Subcommittee, made up of Mayor Roe, Councilmember Johnson, City Manager Malinen, and Finance Director Chris Miller, presented its preliminary report and partial capital funding plan.
Mayor Roe reviewed the purpose of the subcommittee, as part of the City Council's work plan, to determine a path to a sustainable city-wide capital funding plan for the City in light of the ongoing under-funding of capital replacement needs; and to make the community aware of the concerns faced by the City and its elected officials.
Steps taken during this daunting task, and detailed in the subcommittee report dated June 13, 2011 and included in the agenda packet included extending the projected time frame out to twenty (20) years for capital needs; and fine-tuning those things that were anticipated, those that were no longer applicable due to policy changes; and separating out the fire station and park/pathway needs.
Regarding streets, Mayor Roe noted that the Pavement Management Plan (PMP) was sustaining and the subcommittee's recommendation was to look at that over the next few years to determine if any adjustments were indicated.
Mayor Roe advised that all an overall review of tax-supported capital needs and utility fees indicated estimated capital needs of $218 million over that twenty (20) year period, with an estimated $148 million (68%) of that unfunded by current sources.
In reviewing tax-supported capital needs and reviewing three (3) areas covered: vehicles/rolling stock, equipment, and facilities, the subcommittee estimated a $16 million shortfall or gap (57%) in the estimated $28 million projected in general vehicle, equipment and facility needs, using current funding levels and projected costs over that twenty (20) year period.
Mayor Roe summarized the subcommittee's recommendation in shifting approximately $300,000 (approximately 2% of the current $14.7 million levy) from current operating budget funding to capital funding in 2012; and maintain that shift permanently. An additional recommendation of the subcommittee is to increase the annual property tax levy by $500,000 (3.4% of the current $14.7 million levy) in 2012, and to also maintain that increase permanently. The third recommendation was to transfer a $750,000 endowment from the General Fund to the Equipment Replacement Fund, currently with a $-0- balance) in 2012, creating a sustainable fund balance in that fund. Mayor Roe noted that this would create a sustainable funding mechanism for at least the next twenty (20) years, with approximately 40% of the funding coming from operating spending cuts, and 60% from increased property taxes. Mayor Roe provided additional detail on how the funds were recommended for allocation; inflation factors not included in the calculations; and impacts to the City's operations, as well as the average homeowner of approximately $20 per year.
Councilmember Johnson indicated that, from an operating side, those inflationary costs would project a proposed 3.4% levy increase for capital funding purposes.
City Manager Malinen, from a staff perspective for the proposed recommendations, noted that it would significantly change daily operations for the City, and the operating budget would need to be reduced accordingly to achieve it, but in the long run long-term capital needs could no longer be sustained.
Mayor Roe noted that the subcommittee was cognizant of current economic times and current taxpayer burdens, and impacts of these recommendations, reiterating that to achieve this sustainable situation, it would increase costs for the average taxpayer by approximately $20 annually, starting in 2012; then would not increase every year, but the increase would stay in place over the twenty (20) years. By comparison, Mayor Roe noted that there was still the issue of the major capital improvements pending for the City's aging infrastructure: water, sanitary sewer, and storm sewer; and there would most likely be impacts on business owners and residents, depending on how the City moved forward. Mayor Roe noted the dependence on future City Councils to follow-through on these recommendations; however, the subcommittee was of a consensus that the bitter pill be taken in year one to address these significant capital needs and to balance the overall picture, as a main role for the City Council. Mayor Roe clarified that the Park Improvement Plan (PIP) fund was not considered at this time.
Discussion included reviewing allocations and funding recommendations; retaining fluidity in the process to consider the fire station and parks & recommendation capital needs; understanding the implementation picture for the Parks and Recreation Master Plan and any potential referendum, intentionally left out at this time; recognizing the need to maintain existing parks and recreation facilities; inclusion of major facility maintenance (e.g. chiller at the skating center); pathway maintenance included in the twenty (20) year projections, as much as they were known, but reflecting fairly good estimates; and the intent of the subcommittee to provide the nuts and bolts as a functioning City government, while not including solutions to all the needs presented.
Councilmember Pust thanked the subcommittee for their work and their clear explanation, and for her benefit, repeated the three recommendations:
a. Cut spending by $300,000 and put into capital needs;
b. Increase property taxes to raise another $500,000 and use it exclusively for capital needs, representing a 3.4% levy increase; and
c. A one-time transfer from the General Fund into capital needs to endow a one-line item.
Further discussion included clarifying that the levy would remain at the current level at $300,000, but spent on capital needs, not operational needs; $750,000 from reserves to endow the equipment replacement fund, coming from the one-time tax increment financing (TIF) repayment of approximately $1.2 million last year as a result of closing out the Center Pointe TIF District, with $236,000 used in 2011 for capital equipment and the rest in reserves; clarifying that the 3.4% levy increase would be the base to remain level for capital needs; with the subcommittee seeking input from the public and the remainder of the City Council on these recommendations to-date.
Councilmember McGehee requested that the policy of setting aside a specific amount during each budget cycle (annually) as a method of continuing to adequately fund the CIP Budget be written and approved by the Council. This would enable and encourage future Councils to continue this policy so that Roseville can avoid this situation of underfunding in subsequent years."
Mayor Roe clarified that this report is the first draft of such a policy.
Councilmember Johnson concurred, noting that there would be additional recommendations to follow.
Councilmember McGehee opined that this was only a miniscule part of the problem; and while talking about taxes, the City needed to give serious consideration to looking at the City's tax capacity as it developed to alleviate the tax burden on residents. Councilmember McGehee referenced personal conversations she'd had with City Manager Malinen and Community Development Director Trudgeon; and their interest in developing tools, such as the possible creation of an Economic Development Commission, to provide reports on economic costs/benefits of particular developments or programs.
Mayor Roe clarified that this preliminary report is for information purposes only, and no formal action was requested at this time, but that subsequent actions would follow as part of the budget process; and may include a policy resolution for adoption after further consideration.
City Manager Malinen encouraged that any questions or concerns about this approach be provided to the subcommittee; however, he acknowledged that there appeared to be a general consensus in support.
Mayor Roe noted that, in reviewing the budget calendar and process, there would be several opportunities for public comment once the City Council received the City Manager-recommended budget for 2012/2013 on July 11, 2011; including their input on capital needs funding.
b. Continue Discussions on a Preliminary 2012 Tax Levy
By way of introduction, Mayor Roe noted that, unlike the September not-to-exceed preliminary budget and levy, this discussion could increase or decrease as impacts to programs/services was considered and in an effort to guide development of the City Manager-recommended Budget, based on the "decision packages" highlighted and detailed in the RCA dated June 13, 2011.
Discussion included unknowns in the Parks and Recreation Master Plan process at this time and funding sources for implementation, whether bonding or through other sources; intent for this exercise to primarily provide operating budget guidance; and moving the vehicle/equipment replacement funding to the CIP recommendation.
Johnson moved, Roe seconded, a levy increase of 3.4% for 2012, based on the recommendations of the Capital Needs Subcommittee.
Further discussion included adjustments of decision packages accordingly with the 3.4% representing another $243,000 plus $300,000 in decision packages and whether to accommodate $240,000 or $140,000 and how it relates to overall picture; impacts of removing $440,000 from the existing 2011 budget prior to discussion about increased utility fees, county or state changes, and the pending budget impasse at the state level; pending market value homestead credit and subsequent impacts depending on how and if the state resolves that issue and how that may impact levy limits for cities who increased their levies to address that state shortfall.
Councilmember Willmus opined that this was a great starting point for staff purposes in moving forward, but at the same time it needed to be balanced with not having the full picture yet; and recognizing that the process needed to remain fluid and some of the numbers may change dramatically.
Councilmember Johnson opined that some ratio needed to be maintained along the lines of the subcommittee's recommendations, and while they could be fluid, he wouldn't suggest taking more from the levy, as stressing out operations more than 2%, plus inflation, would be too much of a change needing to be absorbed annually in addition to their already absorbing inflation every year. Councilmember Johnson asked that Councilmembers think about it carefully; and in his opinion, he hoped that this City Council determined to move forward unlike past City Councils for a number of years in Roseville who have not made these difficult decisions, putting the City in this current situation. Councilmember Johnson recognized the need to see the whole picture; however, he opined that it was going to get much more difficult than the scenarios and recommendations presented tonight; and would be a bitter pill no matter whose perspective was considered. Councilmember Johnson expressed his appreciation for consideration of the recommendations by the full body, and that it was a huge undertaking for the City Council.
Councilmember Pust opined that the 3.4% in context of the CIP recommendations was great work, held together and made sense; however, she admitted that she had no clue about what kinds of changes that meant for the City to have $440,000 or more cut from their operations, depending on the final figures when the whole picture was available. With all due respect to the process, Councilmember Pust expressed her difficulty in agreeing to this motion until all information was on the table and funding options. Councilmember Pust opined that she would be more comfortable talking about options versus a formal vote to adopt a 3.4% levy increase without knowing all of those options. While agreeing that it made sense, Councilmember Pust noted that this was a big ticket item for taxpayers, in addition to other unknowns at this time; and opined that it seemed premature to vote now to raise the levy when the 3.4% may be too little or too much once all things were factored in.
Mayor Roe clarified that this was not the final action on the levy, but rather a starting point for refinement during the course of the year, and a basis on which to receive public comment on projected impacts.
Councilmember Pust, with all due respect, opined that historically, that is the way the levy system has worked, and she questioned whether the public would understand this approach.
Mayor Roe noted the need for repeated clarification for the public at every opportunity.
City Manager Malinen sought Council consensus on direction early on to meet the directives from the City Council and provide time to explain to them and the public what it means and potential changes; all part of the priority-based budget process. City Manager Malinen advised that this more formal action for the budget would confirm things already presented by staff informally, but would then come forward as part of the City Manger-recommended budget; at which point the City Council could make adjustments and provide more concrete direction to staff.
Councilmember Pust questioned why not pick a "zero percent" levy then as a worst case scenario.
City Manger Malinen noted the recognition of capital needs to be dealt with, not just capital needs, plus an operational budget, but a need to change operations to reflect capital needs for a sustainable future.
Councilmember Pust opined that this worst case scenario could still proceed with capital needs funded from operating, with no levy increases, creating a draconian cut by departments, which would be close to the 10% reduction exercise previously performed.
City Manager Malinen concurred, noting that such a scenario would be close; but he was hopeful with a sense of agreement along those lines, that staff could present a compromise and put the City on a sustainable path for the capital needs side and adjust the levy from the operational side from 2012 on, once the City Council took care of the capital needs portion of the equation.
Councilmember McGehee opined that, after the results from when the City Council asked for the 10% reduction exercise, she was now "gun shy" having found it a meaningless exercise; and whether the City went forward with a 3.4% or 4% levy increase right now, it still meant some cuts were necessary, but guaranteed $500,000 for capital funding, which seemed crucial from her perspective. Councilmember McGehee suggested that City Manager Malinen do a more serious job that she perceived him having done the last time; since she went through the list and made cuts in painless ways compared to his suggestions. While willing to consider at 3.4% or 4% increase, Councilmember McGehee opined that this was a minimal start if those cuts went into the CIP.
Councilmember Johnson, from a biennial point of view, opined that it was important to remember that the 3.4% increase for 2012 included a 0% for 2013; understanding that the 3.4% would remain in place that should make it more sustainable for taxpayers, while recognizing that there could be future unknowns that were not foreseen. Councilmember Johnson opined that the plan on paper looked very sustainable for 2013 and beyond.
At the request of Councilmember Willmus, Mayor Roe advised that the next portion of the subcommittee report would be received by the City Council and public in next weeks' agenda packet.
In an effort to accommodate inflationary items in 2013, Mayor Roe moved an amendment to the original motion, seconded by Councilmember McGehee, rather than a 3.4% increase in 2013 and 0% in 2013, to increase the 2013 budget and levy by $340,000 to handle the decision packages; while retaining the capital need increase of 3.4% for twenty (20) years going forward.
While willing to support the original motion, Councilmember Willmus advised that he would be voting against the motion as amended.
At the request of Councilmember Pust, Finance Director Miller clarified that the $340,000 would represent an approximate 2.5% levy increase.
City Manager Malinen expressed appreciation that there had been no 2012 reduction for contractual obligations or to achieve a zero percent 2013 budget, meaning additional subsequent cuts; and from that perspective, he expressed appreciation in the effort to identify some level of funding for 2013. However, City Manager Malinen noted that the City Council would need to set the 2013 levy again at the end of 2012, and as a biennial budget process continued to develop based on more accurate figures rather than just projections.
Councilmember Willmus advised that was why he was voting against it, since it was not on tonight's agenda; and it needed more transparency for the public.
Councilmember Johnson advised that he was prepared to vote on a levy for 2013, only because it had no current boundaries; however, he supported the initial motion and subcommittee representation to the City Council tonight for a 3.4% levy increase for 2012; and a 0% levy increase for 2013. While understanding Mayor Roe's intent in taking the onus of inflation off costs for directors and staff, at some point, he opined that there needed to be some kind of shift. Councilmember Johnson, therefore, advised that he would not support the motion to amend the original motion.
Councilmember McGehee concurred with Councilmember Willmus in not setting the 2013 levy, opining that it was misleading to say a 0% levy increase in 2013, when that information was unknown at this time. Councilmember McGehee opined that the original motion represented a good start for now, based on available information, and to look at 2013 at the end of the year. Councilmember McGehee spoke in support of the original motion, with the understanding that it was intended as an exercise at 3.4%, not what was being proposed for 2013.
Given the lack of majority support, Mayor Roe withdrew his motion; however, he noted that the City Council was actually putting cuts on top of cuts in 2013, while asking the City Manager to prepare and expecting a biennial budget; but not proposing what that levy should be for the second year of that biennial budget, opining that 0% was not where the City Council wanted to be and questioning why that couldn't be acknowledged now and not have staff forced to absorb operating cuts for two (2) years.
Seeking clarification of the original motion, Councilmember Johnson restated the motion:
Mayor Roe noted that the City Council had asked the City Manager to submit a biennial budget without any guidance for the second year; and opined that staff would be really challenged to accomplish that task without any guidance; and recommended that both years be included.
Councilmember Willmus questioned whether a biennial budget could actually be accomplished without a one year budget and strong guidance for the second year.
Mayor Roe noted the city could, at its discretion do a budget with a spending plan for five (5) years, but only legally required to establish a levy and budget annually. Mayor Roe opined that the City was trying to get better planning tools for a two (2) year period, and should be able to accomplish that.
Councilmember Pust opined that the City Council was on a path to a biennial budget; however, if the motion on the table was for a 0% budget for 2013, there was more discussion needed; further opining that if you didn't want a levy increase for the second year, you didn't want a biennial budget.
Mayor Roe noted that was the discussion between Councilmembers Johnson and McGehee, whether they were supporting a 0% levy increase for 2013.
Councilmember McGehee noted her original opposition to a biennial budget, based on a lack of knowledge and understanding of what it meant.
Councilmember Pust noted that the Council majority had voted in support of a biennial budget.
Ayes: Johnson; Willmus; and Roe.
Abstentions: Pust.
Mayor Roe reiterated the next steps in the City Manger's presentation on July 11, 2011 of the City Manager-recommended budget, in accordance with the previously-adopted budget schedule; with two (2) meetings in July available for public input on those recommendations; and in August a City Council discussion on that input and to receive any additional information available at that point.
c. Discuss Request for Proposal (RFP) for Construction Management Services
Fire Chief Tim O'Neill provided a brief summary of the request to pursue RFP's for Construction Management Services, as detailed in the RCA dated June 13, 2011; noting that the Department would return to the City Council for authorization to accept any proposals; and that they would be based on the best value practices process.
Discussion included differences in the City of Roseville project compared to other communities having recently undergone construction of a fire station based on phasing of the project and unknowns at this point; usual construction management costs at 5-6% of a total project cost; need to understand the logistics of the site and whether it is sufficient to accommodate a station as proposed; consideration of a preliminary design to meet the needs of the City, firefighters, and fitting on the parcel, then proceeding on how to best fund a project; and anticipation of the feedback from the pool of potential construction managers when they attend a pre-proposal meeting.
Johnson moved, Pust seconded, authorizing the Fire Department to issue an RFP for Construction Management Services for Phase I of the new Fire Station Project, using the overall best value process.
Mayor Roe spoke in support of this process as appropriate and as phased.
d. Discuss Changing Future Part-time Firefighters from Fire Relief Association to PERA
Fire Chief Tim O'Neill provided a summary of the proposal to change future City pension benefit offerings for part-time firefighters; as detailed in the RCA dated June 13, 2011. Chief O'Neill's presentation included comparisons of Relief Association (Defined Benefit System) funding and contributions and that of the Part-Time PERA (Defined Contribution System) being recommended.
Discussion included transitions for new firefighters; how the current relief association works and funding options; current retirees and/or spouses receiving relief benefits for life, estimated at approximately 45-50 retirees and five (5) spouses; vesting requirements for the PERA benefits and anticipated number of active firefighters eligible depending on their tenure with the City; transferability of the PERA benefits between cities, creating an effective marketing tool in recruiting new firefighters seeking to make it their career.
Councilmember Pust spoke in support of going with the PERA plan; and questioned the City's authority to change the Defined Benefit System when determined no longer affordable; with City Manager Malinen offering to research that information.
Pust moved, Johnson seconded, authorizing the Fire Department to change future City pension benefits offerings for part-time (Paid On-Call) firefighters to Police and Fire PERA.
e. Discuss Twin Lakes Regulating Map
Community Development Director Patrick Trudgeon summarized, for information purposes, and provided an update on the status of the Twin Lakes Regulating Map and Plan, as detailed in the RCA dated June 13, 2011.
The latest draft, dated June 10, 2011, of the "Twin Lakes Urban Standards" was provided as a bench handout, attached hereto and made a part hereof. Mr. Trudgeon reminded all that it continued to be a working document, and not final, pending the Planning Commission's Public Hearing scheduled for Wednesday, June 15, 2011 at 6:30 pm
14. City Manager Future Agenda Review
15. Councilmember-Initiated Items for Future Meetings
16. Adjourn
Johnson moved, Willmus seconded, adjournment of the meeting at approximately 9:57 pm
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Home / Published Decisions / Graubard Mollen et al v 600 Third Avenue Associates Published Decision
Graubard Mollen et al v 600 Third Avenue Associates Published Decision
By Jeffrey R. Metz
https://www.alblawfirm.com/published-decisions/graubard-mollen-et-al-v-600-third-avenue-associates-published-decision/
Graubard Mollen Horowitz Pomeranz & Shapiro, Respondent,
600 Third Avenue Associates, Appellant. Court of Appeals of New York
Argued May 5, 1999;
Decided June 10, 1999
CITE TITLE AS: Graubard Mollen Horowitz Pom- eranz & Shapiro v 600 Third Ave. Assoc.
Appeal, by permission of the Appellate Division of the Supreme Court in the First Judicial Department, from an order of that Court, entered July 23, 1998, which (1) reversed, on the law, an order and judgment (one paper) of the Supreme Court (Elliott Wilk, J.), entered in New York County, insofar as it awarded defendant the sum of $526,650.68 in interest on escrowed rent payments, (2) vacated the interest award, and (3) remanded the matter for a computation of the interest due. The following question was certified by the Appellate Division: "Was the order of this Court, which reversed the order and judgment (one paper) of the Supreme Court, properly made?"
Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assocs., 252 AD2d 453, reversed.
HEADNOTE
Landlord and Tenant–Yellowstone Injunction- -Interest on Rent Arrears
In a commercial landlord-tenant dispute in which the landlord prevailed, a condition of the Yellow- stone injunction secured by the tenant (see, First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630) which required the tenant to make payments into an escrow account did not nullify the lease pro- vision requiring the timely payment of rent and the accrual of interest on late payments. A Yellowstone injunction merely stops the running of the applicable cure period in order to prevent a forfeiture of a tenant's leasehold interest; it does not nullify the remedies to which a landlord is otherwise entitled under the parties' contract. A monthly sum equal to all rent due under the lease was deposited into the escrow fund; rental payments were not made and the landlord was denied the use of the money for over two years. Accordingly, fairness dictates that the landlord receive interest due under the lease for late payments; otherwise, the landlord, although victorious, would suffer a substantial financial loss. A condition imposed along with a Yellowstone in- junction has no bearing on the underlying rights of the parties, and the tenant was always obligated to comply with the provisions of the lease, despite the court order. The point of reference for defining the rights of the parties is not the court order; it is the lease, and the injunction did not supersede the lease provision calling for interest on rent arrears in the event of a default.
TOTAL CLIENT SERVICE LIBRARY REFERENCES
Am Jur 2d, Landlord and Tenant, § 713.*509
NY Jur 2d, Landlord and Tenant, §§ 250, 256, 364,
NY Real Prop Serv, §§ 71:30-71:32.
ANNOTATION REFERENCES
93 N.Y.2d 508
(Cite as: 93 N.Y.2d 508, 715 N.E.2d 117)
See ALR Index under Injunctions; Interest on Money; Landlord and Tenant; Rent.
POINTS OF COUNSEL
Borah, Goldstein, Altschuler & Schwartz, P. C., New York City (Jeffrey R. Metz and Steven L. Schultz of counsel), for appellant.
I. The grant of Yellowstone relief to the firm did not vitiate 600 Third Avenue Associates' (Associates) monetary remedies under the lease. (Post v 120 E. End Ave. Corp., 62 NY2d 19;225 E. 36th St. Gar- age Corp. v 221 E. 36th Owners Corp., 211 AD2d 420;Waldbaum, Inc. v Fifth Ave. of Long Is. Realty Assocs., 85 NY2d 600;Titleserv, Inc. v Zenobio, 210 AD2d 311;Sportsplex of Middletown v Catskill Regional Off-Track Betting Corp., 221 AD2d 428;61 W. 62nd Owners Corp. v Harkness Apt. Owners Corp., 173 AD2d 372.)
II. Associates is entitled to the full relief sought on its monetary counterclaims. (Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211;Schmidt v Mag- netic Head Corp., 97 AD2d 151;Rodolitz v Neptune Paper Prods., 22 NY2d 383;Seifert, Hirshorn & Packman v Insurance Co., 36 AD2d 506;Aloi v Board of Educ., 81 AD2d 874;Slatt v Slatt, 64 NY2d 966;Delulio v 320-57 Corp., 99 AD2d 253;Kooperman v Picoult, 41 AD2d 980;Solow v Wellner, 86 NY2d 582;H & Y Realty Co. v Baron, 193 AD2d 429.)
Graubard Mollen & Miller, New York City (C. Daniel Chill, Elaine M. Reich and Scott E. Mollen of counsel), respondent pro se.
I. Once the IAS Court mandated as a condition of the injunction that the rent be placed in escrow, ten- ant's obligation to pay the rent directly to landlord was superseded, as a matter of law, and tenant was not in default of the rent obligation under the lease so long as the escrow was extant. (Physicians Planning Serv. Corp. v 292 Estates, 88 AD2d 852;Wuertz v Cowne, 65 AD2d 528;Bennigan's of N. Y. v Great Neck Plaza, 223 AD2d 615;Sports-plex of Middletown v Catskill Regional Off-Track
Betting Corp., 221 AD2d 428;61 W. 62nd Owners Corp. v Harkness Apt. Owners Corp., 173 AD2d 372, 78 NY2d 1123;Clark v Bininger, 75 NY 344;First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630, 22 NY2d 827;Russell Hardware & Implement Mfg. Co. v Utica Drop Forge & Tool Co., 195 NY 54;Carpenter v Osborn, 102 NY 552.)II. Landlord *510 is equitably estopped from claiming breach of lease by reason of rent payments to the escrow account. (Triple Cities Constr. Co. v Maryland Cas. Co., 4 NY2d 443;Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175, 57 NY2d 674;Prager v New Jersey Fid. & Plate Glass Ins. Co., 245 NY 1;Selinger v Selinger, 232 AD2d 471;Agostini v State of New York, 255 App Div 264.)
III. Tenant's liability to defendant for the preliminary injunction is limited to the undertaking for the injunction which is the amount of rent plus accumulated actual interest in the escrow account and landlord cannot obtain any greater damages. (Margolies v Encounter, Inc., 42 NY2d 475;Preston Corp. v Fabrication Enters., 68 NY2d 397;City of Yonkers v Federal Sugar Ref. Co., 221 NY 206, 222 NY 586;Post v 120 E. End Ave. Corp., 62 NY2d 19.)IV. To adopt landlord's argument and overturn the Court below would set a precedent that wreaks havoc in thousands of landlord-tenant cases. V. Reliance by the landlord on Waldbaum, Inc. v Fifth Ave. of Long Is. Realty Assocs.(85 NY2d 600) is misplaced. (First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630;Mann Theatres Corp. v Mid-Island Shopping Plaza Co., 94 AD2d 466, 62 NY2d 930;Titleserv, Inc. v Zenobio, 210 AD2d 311.)VI. Contrary to landlord's claim, the Court be- low's opinion is not internally inconsistent and does not conflict with its earlier decision in this case.
Wesley, J.
This appeal, which arises from a protracted land- lord-tenant dispute, asks us to re-examine the nature, scope and effect of a Yellowstone injunction. Plaintiff is a law firm located in New York City. The firm's predecessor entered into a commer- cial lease in July 1984 with defendant (Associates), the owner of a building located at 600 Third Aven- ue in Manhattan. Paragraph 45 of the lease states:
"If any monies owing by Tenant under this Lease are paid more than ten (10) days after the date such monies are payable pursuant to the provisions of this Lease, Tenant shall pay Landlord interest there- on, at the then maximum legal rate, for the period from the date such monies were payable to the date such monies are paid."
The parties modified several provisions of the lease in January 1992 to provide for an adjustment in rent. The firm additionally *511 negotiated a provision to the effect that neither it nor any of its individual partners could be held liable to Associates for any money judgment obtained against the firm in connection with its tenancy. Concomitantly, the parties added a lease provision that requires the firm to maintain a letter of credit in the amount of $1,000,000 and to replenish the letter of credit when necessary.
Associates undertook an elevator renovation project in 1992. In March 1993 the firm began to withhold its monthly rent because of the alleged failure of Associates to repair and maintain the building elevators. The firm contended that the elevator service restricted its access to the building and that it was therefore partially evicted from its space.
Associates satisfied the firm's rent obligations by drawing on the $1,000,000 letter of credit on November 19, 1993, and again on February 18, 1994. Despite the lease provision requiring the firm to maintain the $1,000,000 security balance and Associate's notification to the firm of this obligation, it failed to do so. By Notice to Cure dated February 24, 1994, Associates advised the firm that it was in default of its leasehold obligations by failing to maintain the required security.
Shortly thereafter the firm commenced an action in Supreme Court and sought a declaration that its ob- ligation to pay rent was suspended due to the partial eviction, and that by drawing down on the letter of credit Associates had exhausted its remedies under the lease. Associates answered and interposed several counterclaims. Associates contended that the firm was, and continued to be, obligated to pay rent under the terms of the amended lease and that interest accrued on late rent payments pursuant to the lease.
The firm simultaneously made a motion for a Yellowstone injunction. During oral argument on the motion, the court explored with counsel the problems associated with issuing a Yellowstone injunction, the firm's obligation to pay rent under the lease and Associates' entitlement to interest on late rent payments. Counsel for Associates also expressed concern about the prospect of a long and drawn out lawsuit during which his client would not receive any rent. The court ultimately granted the Yellowstone injunction, directed that the firm deposit its accrued arrears in a jointly held escrow account and ordered that the firm deposit monthly a sum equal to the rent into the account.
For the next two years Associates received no rental payments from the firm; the escrow account grew to more than *512 $3,000,000. In May 1996 Supreme Court ordered the firm to pay Associates 75% of the rent invoiced for May 1996 and to deposit the remainder in the escrow account. In July 1996 the court ordered the same payments for June and prospectively throughout the course of the litigation. The court also directed that $109,000 be re- leased to Associates from the escrow account for June 1996 and each successive calendar month while the case was litigated.
The firm appealed to the Appellate Division, arguing that Associates could not receive any rental payment during the litigation due to "an open court stipulation." The Appellate Division rejected that
argument, holding that Supreme Court properly exercised its discretion in modifying a condition upon which plaintiff was granted a Yellowstone injunction (Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assocs., 234 AD2d 49). The firm's attempt to appeal that decision to this Court was dismissed as nonfinal (Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assocs., 89 NY2d 1086).
In July 1996, in response to another motion by the firm, Associates cross-moved for summary judgment dismissing several causes of action in the amended complaint. Supreme Court dismissed the firm's partial eviction claim and held that it was required to replenish the letter of credit. The court noted that Associates was justified in drawing on the letter of credit due to the firm's failure to make timely rental payments. The firm again appealed, and the Appellate Division again affirmed, noting that "plaintiff's obligation to pay rent was never suspended" (Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assocs., 240 AD2d 161).
While that appeal was pending before the Appellate Division, Associates moved in Supreme Court for summary judgment on several of its counterclaims, for vacatur of the Yellowstone injunction, and for release of the escrow account. At that time, the out-standing rental arrears through October 31, 1996 totaled $3,213,661.60 and interest due under para-
FN1 Interest grew to $526,650.68 by the time of entry of the order and judgment of the Supreme Court. The parties do not dispute the amount of arrears or interest due on arrears under the lease.
The trial court rejected the firm's arguments. It concluded that since the parties had litigated the propriety of the Notice to Cure, there was no basis to continue the Yellowstone injunction and granted Associates' requested relief–both rent and interest owed under the lease.
The firm appealed to the Appellate Division, solely on the issue of interest. The Appellate Division, with one Justice dissenting, reversed the order and vacated the award of interest granted by Supreme Court (252 AD2d 453). The majority determined that the Yellowstone escrow condition nullified the lease provision requiring the timely payment of rent and its consequences. The dissenting Justice concluded that the majority misapplied the Yellowstone doctrine and improperly deprived Associates of monetary damages provided to it by the lease in the event of default.
Associates moved before the Appellate Division for reargument and/or for leave to appeal to this Court. The Appellate Division denied reargument, but certified the following question to this Court: "Was the order … which reversed the order and judgment … of the Supreme Court, properly made?" We answer that in the negative, and reverse the order below.
In order to properly understand the nature and scope of a Yellowstone injunction we revisit the decision that gave it life. First Natl. Stores v Yellow- stone Shopping Ctr. (21 NY2d 630) involved a controversy between a landlord and a commercial ten- ant over who was to bear the expense of a sprinkler system required by the New York City Fire Department. The landlord contended that the cost properly graph 45 of the lease totaled $514,947.62. asociates argued that once the issue of the default was fully litigated and decided adversely to the firm, the Yellowstone injunction was no longer necessary. Associates took the position that the firm risked the consequences *513 of the applicable lease clause (and mandated statutory provisions for an award of interest) by making a purposeful decision to withhold rent payments. The firm countered that its liability was limited to the under- taking required by the court as a condition of the in- junction.
belonged to the tenant. When the tenant did not comply with the Fire Department order, the land- lord gave the tenant written notice to cure pursuant to the lease. On the last day of the cure period the tenant commenced an action for a declaratory judgment, but did not obtain a temporary restraining order. Thus the lease terminated long before the dispute was resolved. This Court held that it was powerless to revive the expired lease under the circumstances presented (see generally, First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630;Post v 120 E. End Ave. Corp., 62 NY2d 19, 24-25).*514
While seemingly unremarkable, the Yellowstone case ushered in a new era of commercial landlord-ten- ant law in New York State. As a result of this decision, tenants developed the practice of obtaining a stay of the cure period before it expired to preserve the lease until the merits of the dispute could be re- solved in court (Post v 120 E. End Ave. Corp., supra, at 25). These injunctions have become commonplace, with courts granting them routinely to avoid forfeiture of the tenant's substantial interest in the leasehold premises (id.).Yellowstone gave rise to a creative remedy for tenants when confronted with a tangible threat of lease termination.
A Yellowstone injunction maintains the status quo so that a commercial tenant, when confronted by a threat of termination of its lease, may protect its in- vestment in the leasehold by obtaining a stay tolling the cure period so that upon an adverse determination on the merits the tenant may cure the default and avoid a forfeiture. The party requesting a Yellowstone injunction must demonstrate that:
"(1) it holds a commercial lease; (2) it received from the landlord either a notice of default, a notice to cure, or a threat of termination of the lease; (3) it requested injunctive relief prior to the termination of the lease; and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises" 36th St. Garage
Corp. v 221 E. 36th Owners Corp., 211 AD2d 420, 421).
These standards reflect and reinforce the limited purpose of a Yellowstone injunction: to stop the running of the applicable cure period (Post v 120 E. End Ave. Corp., supra, at 25).
The firm contends (and the Appellate Division majority apparently agreed) that the rent deposits at is- sue were paid by the tenant pursuant to the terms of the court order, not the lease, and therefore the lease provision is inapposite. That argument misses the point. Contrary to the firm's characterization of the escrow fund, a monthly sum equal to all rent due under the lease was deposited. Rental payments were not made and Associates was denied the use of the money for over two years.
In Waldbaum, Inc. v Fifth Ave. of Long Is. Realty Assocs.(85 NY2d 600), we examined the nature of the parties' rights under a Yellowstone injunction. We reiterated that a Yellowstone injunction stays only the landlord's termination of a leasehold *515 while the propriety of the underlying default is litigated. Significantly, a Yellowstone injunction does not nullify the remedies to which a landlord is otherwise entitled under the parties' contract:
"The Yellowstone injunction only served to forestall defendant from prematurely canceling the lease during its initial term … The injunction could not, in and of itself, relieve plaintiff of the necessity of complying with the condition precedent to renewal set forth in the lease" (85 NY2d, at 606).
Waldbaum clearly indicates that the firm always was obligated to comply with the provisions of the lease, despite the court order. Conditions placed upon the grant of a Yellowstone injunction do not, contrary to the Appellate Division's reasoning, alter the rights and obligations of the parties. The point of reference for defining the rights of the parties is not the court order; rather, it is the lease itself. The Yellowstone injunction at issue here did not supersede the lease provision calling for interest on rent arrears in the event of a default. The Yellowstone injunction protected the firm from eviction; it did not rewrite the lease.
FN2 Indeed, the Appellate Division recognized that "plaintiff's obligation to pay rent was never suspended" by the Yellowstone injunction in the firm's second appeal (Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assocs., 240 AD2d 161,supra).
Although Yellowstone injunctions historically have been used to protect tenants from eviction, they provide a modicum of protection to landlords as well. The escrow account was simply a condition of the Yellowstone injunction, much like a bond, to en- sure that Associates was paid when the day of reckoning finally arrived in this protracted litigation. A condition imposed along with a Yellowstone injunction has no bearing on the underlying rights of the parties.
The firm's reliance on City of Yonkers v Federal Sugar Ref. Co. (221 NY 206) is misplaced. In that case the Court held that damages caused by an improvidently granted preliminary injunction are limited to the amount of the undertaking. The plaintiff had sought a preliminary injunction to enjoin a pub- lic nuisance. Its liability for injury caused by the preliminary injunction was limited to "such dam- ages, not exceeding a sum, specified in the under- taking" pursuant to section 620 of the former Code of Civil Procedure. In this case, there is no statutory mandate limiting Associates' recovery. Moreover, the damages *516 in Yonkers resulted from the issuance of the injunction, while here, the monies owed to Associates arise out of non-payment of accrued rent.
Fairness dictates that Associates receive the interest due under the terms of the lease. To rule otherwise
would place Associates in an unenviable position. Though victorious in this litigation, it would nevertheless suffer a substantial monetary loss. In addition to not receiving rental monies to which it was entitled for almost two years, Associates would forfeit interest due under the terms of the lease. Equity takes a dim view of such a result. When Associates prevailed, it was entitled to interest as agreed to by the parties in their lease.
Accordingly, the order of the Appellate Division should be reversed, with costs, the order of Supreme Court, New York County, reinstated and the certified question answered in the negative.
Judges Smith, Levine, Ciparick and Rosenblatt con- cur; Chief Judge Kaye and Judge Bellacosa taking no part.
Order reversed, etc.*517
Copr. (c) 2009, Secretary of State, State of New Y ork
N.Y. 1999.
GRAUBARD v 600 THIRD AVE.
END OF DOCUMENT
Graubard-Mollen-et-al-v-600-Third-Avenue-Associates
Jeffrey R. Metz
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Synod Delegates - Mark Ingram, Gail Peters, Ralph Peters, (Alternate) Seth Miller.
Please make sure you attend this important service celebrating the ongoing life of this congregation. We thank every one of these individuals for stepping forward and responding to the Power of the Holy Spirit within their hearts. May we have a great year of ministry!
You are invited to take part in a Bible Study of Job based on David Jeremiah's guide entitled "Tried, Tested, and Triumphant." It's never too late to join us. The Bible studies will resume on Wednesday Night, May 1st starting at 7:00 pm.
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