Board of Estimates Recap – Part I

CONFIRMATION OF ROB PHILLIPS, CITY ENGINEER
Chris Schmidt asks him to talk about the last 5 years and what you see as priorities in the next 5 years. Phillips says there is a diverse group of functions in the different areas. Sewer Utility is going well, they can address issues quickly. Reliability is exception right now, they had a record low with only 20 back ups. They will have issues with the rate structure, but it is going well. Storm Utility has pressures on it due to regulations (total suspended solids, and Rock River TMVL). They will need infrastructure improvements that are expensive that will drive up rates and they need to make sure the rates remain affordable, they are exploring other solutions to remove total suspended solids and phosphorus. They are also looking at chronic flooding on University Ave. Transportation is looking at ped bike component and streets and bridge. They have a long history of bike improvements and are proud of it, they are working on several new paths (Goodman, bridge over HWY 30, along highway M) Streets is also putting pressure on the budget. University Ave. and E. Washington are nearly complete, many new projects coming up. Those will also put pressure on the capital budget. Maintaining our existing streets will be an issue, they won’t be able to maintain them as they used to. Facilities is a huge growth area, lots of small projects, more pressure on the capital budget. Motion to adopt passes on a voice vote.

KIPP LEASE AMENDMENT
Fence
They take it up early for staff that have to leave. DeMarb asks what the public is here to speak on – mayor says one on 38, one on 47. Don Marx explains the lease, says there are 2 10 year renewal options. They exercised the first one, the lease goes through 2017. One amendment removed the bio-basin and they put a clause in for rent credit for verified costs that Kipp put in to sound blocking fence. Second amendment is that it includes costs in researching types of fences and opportunity to get out of lease with one year notice if transportation corridor needs to void the lease. The third amendment the rent will go up, confirming $60,000 for the fence, they say it cost $79,000 and parking improvements will serve as a cap for the PCP. Updated nondiscrimination clause in the lease. The fence was for a wooden sound blocking fence but it had to get approval from the city – the question is if they are willing to pay for the fence, is it sound blocking or not and there is some disagreement what they were sound blocking. He shows pictures of where the fence is (by the houses), the fence is on Kipps property. He shows a picture of an older chain link fence that was there, the intent of sound blocking fence was for noise coming off the parking lot and hope or intent to block noise from the factory. That might have been unrealistic. He shows the new fence, its solid wood. The fence is 9 or 10 feet tall, the cost of the fence went up to keep the fence level due to the topography. It definitely takes care of visual pollution but not the sound. More pictures to show relation of fence to the building and stacks, the noise comes out of the top of the stacks, the fence would have to be tall enough to block that. The stacks were added and helped some, they have put in noise insulation in the factory. They are not in default of the lease. They renewed in 2008, fence went in 2014. They weren’t required to do the fence, but they had the option. We could say they didn’t get our approval and not pay for the fence. We probably would have approved it, but weren’t asked. Kipp says they did before and after sound blocking and immediately beyond the fence they say there is improvements. They are recommending going with the original estimate of $60,000 even though Kipp says it cost $79,000. Marsha Rummel says they did ask for the fence, but they didn’t ask for approval. There are other real improvements. She says that you are supposed to follow the lease, what if this was a private citizen. Denise DeMarb says technically they are not in default, there are no zoning issues, it is legal. Palm asks if the lease says they could get money – yes the 1st amendment. They have fully paid for the fence but are just asking for reimbursement or a credit. They have also been making all their lease payments. They are current on their rent, and are asking for a credit until they recapture it. Verveer asks if Kipp claims the city approved the fence – no. Verveer asks if Kipp wants the full $79,000. Marx says that they informed Kipp they would only pay $60,000. Staff says that original amendment has $79,000 and that was negotiated with staff and Kipp. Afterwards they told Kipp they would revise that number. Verveer asked if they were agreeable? They accepted the information, but didn’t necessarily agree. They are voting on substitute version 2 – to clarify. Mayor says there are 3 options, pay $79,000 which is what they paid, $60,000 was their original estimate and $0 which is because they didn’t perform by not seeking city approval. Verveer asks if the City Attorney advice is that we don’t have to pay anything. Staff says technically we would not be obligated to pay, it is a policy decision.

Bio-basin
City installed a rain garden several years ago. They discovered the rain garden was contaminated with PCBs, Kipp premeditated it with clean soil, replanted at Kipps cost and it was new. Kipp cam in for renovations required because of the remediation, they need pump equipment and got a permit. Did parking improvements without a permit. The combination required stormwater improvements. Their property drains almost exclusively into an area that is treated. Almost no other property drains there. They want the rain garden tested and remediated in the future. They had 4 meetings on this, there have been tweaks to the lease requiring Kipp to televise the storm sewer line that feeds the raingarden. The neighbors think that contamination could be added there. They also want the testing to be every year for 3 years and every 3 years after instead of every 5 years. Stormwater discharge permit requires annual updates but done have to submit to DNR unless requested and DNR won’t request them, but we are requesting them as a condition of the lease. This puts us in a better position to get information and Kipp is paying for what they should instead of the taxpayers. Palm asks where the outlet is, staff says it eventually goes to Starkweather Creek. Palm asks if we are responsible for that discharge. John says that PCB is what we are talking about, the rain garden will get trapped in the rain garden, the expectation is that it will get trapped and that is why they are monitoring it. They don’t expect future contamination, they think the contamination was historical from the parking lot prior to surfacing it and due to weed control by waste oil. They have done significant clean up under DNR and EPA. Staff don’t think there will be a new release, it would come from disturbing what is already there. DeMarb asks if there are acceptable levels of the contaminant in the soil. In industrial soil it would be odd not to find it in an industrial area, at least some. The clean up requirement is residential because the public has access to it, not industrial. The raingarden is required by the new amendment, the city has been maintaining it up to now. DeMarb asks if there are some in other industrial areas. Staff says they are very common. DeMarb asks who maintains them and if they are monitored. Staff says that they are on private property and they have to maintain it. Staff says that this is a result of the DNR issues. DeMarb asks if they should be testing other areas. Staff says most bio-retentions are for parking lots which have their own contaminants. They have a 15 year life cycle and it will fail an annual inspection and then you’d have to tear it out, test the soil and figure out how to dispose of it. The system is well set up to protect against problems. Verveer asks about the MEJO (Midwest Environmental Justice Organization) opposition to the 3rd amendment. Staff says they were opposed to paying for the fence, that they wanted sampling between bike path and the biobasin plus he wanted more to be in the lease. Verveer asks if they support the sampling, staff says they can’t do it til warmer weather, the city will do it then. Given the DNR investigation he sees why they don’t think that it is contaminated by Kipp and it might have come from somewhere else. Palm asks when the railroad was put in? They say it was a railroad until it became a bike path. Palm asks if it could have come from the other side. Staff says it could come from several areas and that he thinks the top levels of soil are not contaminated but probably deeper and people will not come into contact with it. The Goodman Center has undergone remediation and is capped. Rummel asks if this is unique or common? Marx says that they have over 300 leases, there are some defaults and they would not renew until corrected, this is different. Yes, there have been defaults. Rummel asks if they have taken options, Marx says yes they have not renewed or demanded the rent. DeMarb asks about the fact that they did not ask for permission on the fence or permit for the parking permit. She says they seem to have a history of not following the rules. DeMarb asks if they can’t know something specifically, when writing a lease, can’t we put a clause in the lease that is an if, then. Seems like we would not want to do anything given the history. Michael May says that if the sampling shows something they would have to say what they want. May says that if we say nothing, they may say no amendment and we are getting some favorable things. Rummel says that they need something from us as well, the DNR is requiring them to install the groundwater remediation shed and they need a permit from the city. The end of last year we said they could build the shed and they have started it. It was a zoning approval for the shed, engineering for the parking lot. Neither of the projects by themselves would have required the stormwater remediation, but the city combined them. Its not like no one hasn’t gotten a permit for parking lots before – from his perspective they asked for a permit all at one time and that through them into this category. If they didn’t negotiate in good faith would they have an argument to get two permits? Maybe. Verveer asks if there has been enforcement action, zoning has not done it. If they find out about it they probably would. Kipp says all they did was resurface it, but couldn’t give them proof, so they assume it is a reconstruction, resurfacing would be exempt for a permit, unless they do curb and gutter. Normally they would just make them get a permit after the fact. There are currently no outstanding orders on the parking lot. Palm says that we can get mad, there are hundreds or thousands of cases where there are violations and we find ourselves in quandaries when we try to follow up. He talks about TIF project on W. Washington. We could get mad at city and do enforcement, most of the time the city works with property owners, he is not interested in paying $79,000, Kipp will not be winning the good neighbor award, the relationship is strained, but at the end of the day the city has gotten what we asked and we don’t penalize companies, he is inclined to support as written. DeMarb appreciated Palm’s opinion, people make mistakes all the time and we need to be fair, but given Kipp’s history, you would think they would make sure their i’s are dotted and t’s are crossed and they seem to have a disregard. You need to balance the business and jobs with the residents needs around there. She says that the residents were hopeful about sound remediation, can more be done? Yes, as part of the fence, it is limited, the fence isn’t doing nothing. It does knock down a small amount of noise, light and visual pollution, but the noise comes from the stacks on the roof and you’d need to put something on the roof. It wasn’t mentioned in 2008. More can be done, but it might not be the fence. She would support $60K, not $79K since they continue to not follow the rules.

Amendment on testing in the spring
She makes an amendment to have attorney’s office add a clause about further testing of green space in the spring, given the history of the area. She thinks we don’t want to ignore that, but we could test in the spring. Mayor asks what the lease says, nothing at this point because the land to be tested isn’t part of the lease. Mayor asks about testing we are planning. Staff will test it in the spring, its city right of way and not part of the lease. Mayor asks what the difference is between us doing it and putting it in the lease. Attorney May says that we can say the city will test and require them to pay the costs. Verveer asks about the issue of responsible party for remediation, staff makes the same point, the question is who is responsible, it would be hard to determine. If we could show it was Kipp they’d be on the hook, but it could also be the railroad. Rummel likes the language. What she also liked was what action would be taken if they find contaminants. Verveer asks what the underlying motion is. Adopt substitute version 2. DeMarb withdraws the motion and remakes it. Rummel makes the motion for her (even tho she is not on the body, she creates the language). Rummel says two elements to negotiate would be for the city to test the red area, our own property and if we find contamination, we would ask Kipp to help pay for it and the second part is if there is contamination on the Kipp land they would have to address it to best practices. DeMarb restates it. Staff says the second part is already in the amendment. Motion is seconded. City Attorney says they have enough direction to draft it assuming they are skipping the second part. Subeck asks if there is a way to determine if Kipp was responsible for the contamination. Staff says it would be tough. Subeck asks if there is a history of other contamination. Staff says yes, there have been others that have contributed to contamination in the area. Subeck says she wants to make sure they can be reasonably sure they were the ones that cause the contamination and she doesn’t think we can. Joe Clausius says the lease increases the biobasin. He asks if the red area adds more. Staff explains by pointing to a map, the area outlined in blue is added and will be in the lease. The amendment is adding to test in another strip of land and tell Kipp it has to be part of the solution. Clausius suggests that they add that strip to the lease. Palm asks how the negotiation would work and what would come to council. May says they will need time to work out the details and see what they can get agreement on. He suggests they might want to refer this to another meeting once they know what they want. Rummel says referral should be part of the discussion. She also says if you look at what is reasonable and the other projects in the area, the only part that hasn’t been tested is where the red area is. She says it seems reasonable to her that Kipp is the cause. It’s not impossible to imagine that there would be a preponderance of the evidence that it was them. Plus, this is near a splash park and kids may be playing in the area. Staff says it should be tabled until further negotiations can take place. He says he has been dealing with Kipp his whole career and they are much more neighborhood friendly than they have been in the past, there are still issues, but there is enough discussion of changes here and if we want to build the attitude of change at Kipp it would be good to negotiate with them. He says there are things we gain, their contamination under the parking lot are not gone, but the parking lot and building are acting as a cap. We want them to maintain that cap and commit to cleaning up the contaimination. Mayor suggests they may want to refer to the city attorney’s office. It is moved. May asks if they should act on the amendment first. They withdraw referral. Motion passes, not unanimous. They move to refer. Verveer says he wants to make it clear that they haven’t decided on the fence credit. Larry makes bad jokes, like only Alder Palm can. Rummel thinks that they are making improvements and agrees with the strategy. Motion to refer passes.