Council tackles development in busy meeting

The Forest Lake City Council discussed two major residential developments in town and moved closer to resolving the airport paving cost overrun issue at its March 27 meeting.

City hall property

Developer Gaughan Companies presented to the council its preliminary planned unit development proposal for a high-end apartment complex to be built on the site of the old city hall at 220 Lake St. N. The council continued to be enthusiastic about the complex, now called Lighthouse Lofts, though some members’ concerns about the development having adequate parking remained.
Gaughan hopes to start demolition at the old city hall by the end of April to make way for its apartment building, which is currently planned as a 104-apartment complex with three retail spaces, including an as-yet-unannounced restaurant.

Site improvements will include a reformatted Second Avenue with street parking in the area and a vacation of Third Avenue, which will be turned into more parking for the complex. The city has a water treatment facility that is currently accessed from Third Avenue, and the council instructed Gaughan and the city to make sure that the new lot will be able to continue to provide access to the facility before construction moved forward.

The council approved a development agreement for the property in January, and the city wants Gaughan to close on the property before it begins demolition later this month. After approving the preliminary planned unit development on March 27, the city has scheduled a flurry of approvals related to the property for the coming weeks, including the proposed creation of a tax increment financing district (April 10), the approval of a final planned unit development (April 12 for the Planning Commission and April 17 for the council) and agreements on street vacation, site improvements and other issues (April 17).

“It’s a great investment in Forest Lake,” Mayor Ben Winnick said. “I think it’s a shot in the arm the downtown needs.”

Some members were still a little leery of the amount of parking available at the complex, which at 183 on-site lots is below the normal city requirement of 2.1 lots per unit – 64 more spots that are technically considered off-site will also be located in the vacated Third Avenue, but those will be shared with the retail space. The complex also has a greater number of single-bedroom units than is normal under zoning rules, and Gaughan has previously expressed its comfort with the number of spaces, noting that the structure will be built to encourage walking (there will also be a number of off-site parking spots nearby). Ultimately, the council approved the planned unit development.

190th development

In an early look at a proposed housing development along 190th Street and Tanner’s Brook Golf Course, council members expressed excitement about the site’s potential and heard from city staff about some of the issues to consider when approving a development away from other developed areas.

The council took no action other than offering comments on the concept plan for the 19-lot development from Jendi Properties, which, if approved, would be built south of 190th Street on a zig-zag-shaped parcel of property along a portion of the west side of Tanners Brook Golf Course.

Zoning Administrator Donovan Hart praised the idea of the project but included in his presentation to the council a number of reasons why city staff felt the project was, as stated in Hart’s staff report, a “premature or impermissible subdivision.” Though the project is along the sanitary sewer intercepter line that feeds back into the Twin Cities, it is zoned agricultural, not on track for urban development until after 2030 in the city’s comprehensive plan (and at a higher density than the currently proposed project), and is on a gravel road and about 2,200 feet away from city water lines at Headwaters Parkway.

“The public utility infrastructure isn’t there yet,” Hart said.

Most of the council members, however, expressed interest in finding a way to move forward with the development. Winnick called the project “the best scenario” for the property, while

Councilman Michael Freer said a development shouldn’t be discounted because it doesn’t fall perfectly into long-range projections.

“I acknowledge that you’re technically correct, but I ultimately think it’s an outstanding project,” he told Hart.

City Administrator Aaron Parrish pointed out that putting a development in an area not connected to some city amenities can be a city planning headache, particularly if the development isn’t connected to city water right away and utilizes private wells before connecting to the city system later. He also said a development in the area would likely lead the city to a discussion about whether it is time to pave that segment of 190th Street – an issue the city already hears about periodically from out-of-town visitors who don’t like driving on a gravel road to get to the golf course.

“To the extent that we’re bypassing a lot of other development, that is a factor,” he said.

Still, the council expressed hopefulness about the feasibility of the project, with Councilman Sam Husnik and Councilwoman Mara Bain adding their voices to Winnick’s and Freer’s that they would like to see the project succeed if planning concerns can be mitigated.

“I want to find a way to make it work,” Bain said.

Airport payment

Besides development issues, the biggest thing on the council’s March 27 agenda was a vote to approve a change order agreement and payment OK’d by Dresel Contracting, the contractor that worked on the Daniel DePonti Airport paving project, and by SEH, the firm that engineered the project.

In the fall of 2016, the council learned that SEH did not inform the city of cost overruns on the project incurred by an underestimation of how much topsoil fill would be needed at the site. Since then, Dresel, the city and SEH have been attempting to come to an agreement on how much of an overrun was incurred and how much additional money Dresel was owed (learn more in the Feb. 9 story “Council rankled by ongoing overrun dispute” or online at

In late March, the parties came to an agreement on the change order: an additional $843,000 in cost. As part of the agreement, SEH would pay Dresel $74,000 (10 percent of the cost beyond what was originally budgeted for contingency), and the city would finance the rest of the sum before submitting the cost to Minnesota Department of Transportation Aeronautics for reimbursement in July, when the department’s new budget cycle begins. MnDOT Aeronautics has thus far committed to financing 90 percent of the costs of the project, and city staff has told the council that the department will likely do the same with the latest cost, though the city has no guarantee.

As part of the agreement, the city retains the right to sue SEH for more reimbursement should MnDOT Aeronautics not cover the additional costs. City Attorney Jay Karlovich said he doesn’t believe the city would be able to recover legal fees from SEH, which did not send a representative to the council meeting.

The council voted 4-1 in favor of the agreement (Freer voted against, saying that Dresel should be paid but that MnDOT should make the payment now), but council members were all upset that SEH’s failure to keep the council up to date in the fall had led the city to this point. Freer said the council should discuss possible litigation against SEH in a closed session, while Councilman Ed Eigner said the timing of SEH informing the city about the overrun seemed fishy, as if SEH was holding up on letting the city know what had happened until all of the work could be completed.

“It wasn’t even a week (after completion) and all of the sudden, this hit,” he said.

The council apologized to Dresel for the inconvenience of the entire affair. In the negotiation process, Dresel believed it was owed more money than what was finally settled on for the change order, at one point arguing that the costs incurred by the additional fill amounted to more than $1 million.

“(The final change order) is the best of a bad situation, and we’d like to move on,” Dresel co-owner Jeremy Dresel told the council.