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Attorney pokes holes in McCoy covenants and proposal

POSTED February 22, 2017 2:18 p.m.

SHULLSBURG — At the Shullsburg City Council meeting Wednesday, Feb. 15, 2017, a requested written opinion by Attorney Paul Johnson, regarding the McCoy development proposal, was read by Mayor Gloria Swenson. The main points are listed here:
    Johnson - I understand the intent of this project is for the McCoys to gift the property to the City. However, I was not aware that if the City does not utilize the property for the intended development, or defaults on the agreed-upon terms, the property would revert to the McCoy Family Foundation or a successor 501(c)(3) entity. I am not very familiar with the financial reasons for setting this transaction up in the way that it has been established to date, but this information raises the question as to why the City is involved in the ownership and sale of the lots at all. The City does not need to own the property in order to use TIF funds for the infrastructure “project costs.” Further, if McCoy is going to gift the property to the City, the site should not be conditional. If the McCoy Family Foundation or a successor 50l(c)(3) entity is available to hold the property, it seems to be in the City’s best interest to have the Foundation sell the lots for $1.00, and then the City does not have a role in selling the lots or enforcing the covenants.
    Swenson – The original agreement is that the city would be responsible.
    Johnson - The Plan provides that the City, through its council, will be responsible for selling the lots. The sale price for each lot will be $1.00. The City Council should consider how it intends to sell the lots. Will a realtor be retained and if so, how will the realtor be compensated for its services? If a realtor is not to be obtained, how will the. Council market the property, review, evaluate and accept offers? If the lots are to be offered for $1.00, you can anticipate many inquiries and offers. How will the City evaluate which offers should be accepted and which should be declined? I presume the City’s intent is to sell these lots to individuals looking to buy homes, and not to real estate companies looking to buy lots cheap and then turn them for development purposes later on. Assuming this is accurate, safeguards will need to be considered to prevent this from happening.
    Swenson – The original agreement is that the city would be responsible for selling the lots, the price would be $1.
    Johnson - The Plan also indicates that after 7 of the lots are sold, a Homeowner’s Association will be created and the Homeowner’s Association would then establish a set of rules and bylaws to further govern the development. A majority of the lot owners, the City and the McCoy Family Foundation must all agree on the rules and bylaws prior to their initial adoption. I think this is a very bad idea. As a general rule, covenants and restrictions, Homeowner’s Associations, and bylaws for those associations should all be put in place up front and be established by the owner of the development before any lots are sold. In this case, the McCoy Family Foundation should establish the covenants and restrictions, should establish how, when, why and who will be the Homeowner’s Association, and should establish the bylaws for the Homeowner’s Association. This should be done in conjunction with the City, and the covenants and bylaws should both be recorded before the McCoy family turns the property over to the City. If the Homeowner’s Association and the bylaws are created after 7 lots have been sold, a situation will be created where the affirmative vote of 9 separate entities will be required to accomplish anything. If the McCoy family puts all of this together before turning it over to the City, then the only approvals necessary will be of the McCoy family, and the City of Shullsburg.
    Swenson – That was addressed. (No response to the serious questions raised in this paragraph.)
    Johnson - The Plan also contains information regarding a permanent fence line to be maintained by the City. If this fence line is on private property, the City will need an easement of at least 5 feet on each side of the fence in order to access the fence for repairs and maintenance. One of the maintenance issues will be mowing lawn, and more importantly, keeping the weeds around the fence posts down. The fence agreement that is contemplated will need to identify which party is responsible for keeping the weeds down, and if the property owner is responsible, a penalty for failure to comply.
    Johnson - In Covenant No.1, I suggest that the residence be completely built within 12 months of the date of closing, not the date of purchase. This is a minor detail, but the date of closing is a more definite term. I also suggest that while the City is in charge of enforcing the covenants, that the monetary penalty suggested be imposed as a special charge pursuant to § 66.0627 of the Wisconsin Statutes. This will allow the City to place any monetary penalty on the tax roll for collection. If and when the Homeowner’s Association takes charge, language should be inserted in this covenant which will allow the Homeowner’s Association to automatically impose a lien upon the property for any penalty.
    Johnson - In Covenant No.5, it is provided that all home or condominiums must have an attached 2-car garage. Does this mean that three-car garages are prohibited? Also, it is required that the driveway be completed within 6 months of occupancy. The same monetary penalties as set forth in Covenant No.1 should apply if a land owner does not comply with the terms of this covenant.
    Swenson – It is my understanding that three car garages are not prohibited. That should be added.
    Johnson - In Covenant No.6, I suggest adding some language which requires any condominium units that will be developed to require each condominium unit to have its own sewer and water lateral to the mains, and also for all condominiums to have a minimum one-hour fire wall between the units and each unit shall have its own wall so no common walls are created. The City should review any and all condominium declarations for condominium units, and should take steps to ensure that it not have any enforcement powers over any condominium association created based on the declaration.
    Swenson – That is a good safety suggestion.
    Johnson - In Covenant No.7, specific setbacks are set forth and required. These setbacks are greater than the setbacks required by your current zoning code except for the rear yard setback. The rear yard setback should match or exceed the new R-I and R-4 District requirements.
    Johnson - In Covenant No. 10, I think it will be very difficult for anyone to enforce the 48-consecutivehour rule and the 4-day-in-a-given-month rule for the storing of boats, trailers, campers or RVs. I understand the desire to have language such as this, but I simply do not know how this can be enforced. Further, towing vehicles in violation is a recipe for disaster.
    Swenson – I think the point is to keep residents from parking their vehicles on the grass and in their yards.
    Johnson - In Covenant No. 12, it is provided that an in-ground swimming pool must include a self-locking gate. I presume that the self-locking gate will be attached to a fence that will fully surround and enclose the pool. The fence requirements should be consistent with the requirements of the City Zoning Code.
    Swenson – I think it should say there should be a fence around the pool.
    Johnson - In Covenant No. 15, will garage sale signs be allowed?
    Johnson - Covenants No. 20 and 21 is where the language as to how the City is going to enforce these covenants will be inserted. My thoughts regarding the City’s enforcement of these covenants is set forth in my prior letter of February 1, 2017, and once the City decides how it would like to address this issue, I would be happy to attempt to draft a more specific language to reflect the City’s plan.
    This will need to go to Attorney Nathan Russell.
    Swenson asked for discussion. Alder Emmitt Rielly reread the first ‘Johnson’ paragraph and said, “the attorney is very skeptical about the whole deal.” Swenson responded, “No, he’s skeptical about who is selling the properties.” Reilly, “It would be interesting to see if the people of Shullsburg read both of these documents, what they would think.” Swenson, “I think the control goes to us.” Rielly, “If McCoy’s want to give the City of Shullsburg property it should be – here’s the property, no strings attached. Then we should do what we want with it, list it with realtors for development, then we wouldn’t be spending…” Swenson interupted, “If you list it with realtors, you have to pay them.” Rielly said, “The point is – if we owned it, we could sell lots for what we want, we could have realtors sell the lots at a fair price, then we could get some money back and the people of Shullsburg wouldn’t have to pay for the whole thing.” Reilly continued, “People on a fixed income, people that people in this room don’t care too much about wouldn’t end up paying for the whole thing. It would make a lot of sense to me, but evidentially not to the four of you.”
    Alder Jim Paquette said, “We’ve already decided all these things.” Rielly said, “It isn’t going to happen, this is such a bungled up mess. It’s time it stop, it’s time it just ended.” Swenson said, “We already stated on Aug. 14 that we were going forward with this.” Rielly, “That can be changed.” Paquette, “Well, it’s not going to be.” Rielly, “I think it will be stopped, you aren’t aware of what’s going to happen yet.”
    Alder Cory Ritterbusch said, “I think there are some viable questions here (Atty. Johnson opinions), but I think the McCoy Foundation and McCoy lawyers should be answering them, not us.” Rielly said, “We have agreed to pursue it, we haven’t done anything yet. There’s no property exchanged hands, no covenants – this hasn’t moved an inch in a year. And it’s got to stop!” Swenson said, “Things take time.”
    In other business.
    A motion was approved to accept a donation of this years Christmas lights in Shullsburg from Dwayne Gerht. Mayor Swenson and Reilly thank Gerht.
    Jeff Russell, representing the Shullsburg Community Development Corporation, was present and asked for the city’s support for the Shullsburg Visitors Guide. The city approved $500 toward the guide.
    The city approved a contribution to Water Street flowers in the amount of $1,000.
    The city accepted a Electric Line Apprenticeship agreement (contract).
    Approved a Shullsburg Fire District assessment in the amount of $30,700.
    Approved the Shullsburg Ambulance assessment in the amount of $12,195.
    Approved the 2017 Shullsburg Utility budget as presented.
    Committee reports: Sewer – Couple of manholes will be replaced; Working on the phosphorus situation; Roof completed; Pump ordered $5,609; Needs a CODE reader - $949. Water – Employees at school for a week; Well 3 is back in operation and working fine; Two scales for chlorine are needed; Computer not working, debating on what to do; Received an award for Fluoride level; New manager needs to happen this year. Electrical – new shelving for inventory, change in inventory last year $23,000 – this year $87,000; looking for computer to keep track of inventory. Police – Kathryn Riseley is in place as the Administration Assistant. Library – there will be changes in the next month.
    Approved bills. Emmitt Rielly asked, “How many thousand of dollars have we approved for the McCoy development, it must me over $10,000 by now.” Marsha Einswieler responded, “$10,000 to Delta3 to do the concept plan alone, in this weeks vouchers it’s over $4,000.” Rielly said, “It goes back and fourth and back and fourth and back and fourth and we’re not getting anywhere. This whole project needs to end. Mayor Swenson cut off Rielly and asked for a vote on paying the bills. $362,074 includes Feb. settlements to the taxing jurisdictions - Approved.
    Public Comment – Jason Weiskircher spoke, “Is the city council doing a independent business plan to ensure the success of the McCoy development? The attorney brought up that there may be problems about the sale of the lots. I’ve been shouted down on this and been told we’re not selling the lots. We are creating a product, there is going to be value to this product and not to be able to have a say on how the lots will be sold, you’re leaving a lot of things to question. This should have a full blown business plan. We heard today from an attorney with issues and you’re going to throw it back to the lawyers. Who is representing the city? If we’re going to invest all this money we better insure its success. A lot of questions still exist. If the city excepts this gift it’s either do just what the McCoy plan says or give it back.”
    Gehrt said, “I don’t see the business plan as a big deal, you can work that out. Your concern with the advertising or…” Weiskircher said, “I’m concerned that the city will spend nearly $2 million., without a really good plan…” Stan Woodworth intervened, “No, no, no. You missed a meeting and attempted to continue....” Weiskircher yelled “Whoa, whoa, whoa, stop, stop!” Swenson said, “Lets not raise our voices here, Jason you’re done. Stan you have the last word.” Woodworth said, “We had Gary Peterson, AICP come to the city and lay out all the numbers on this plan. Unfortunately you weren’t here that night. It was demonstrated that the plan makes financial sense. You come to these meetings and you’re shooting a scattergun at everything about a plan.”

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