5.a) Satisfaction and Release Agreement with Washington County, Gravel Tax Distribution Meeting Date: 9/1/2009
Agenda Item: �� � �
City Council Agenda Report
City of Scandia
14727 209`h St. North
Scandia, MN 55073 (651) 433-2274
Action Requested: Approve a Satisfaction and Release agreement with Washington
County, providing for the payment of$955.21 to the City of Scandia
for errors made in the distribution of gravel tax revenue from 2002
through 2007.
Deadiine/ Timeline: N/A
Background: • In 2008, it came to light that there had been an error in the
distribution of gravel tax money to communities in Washington
County, due to errors in reporting by the operator of a gravel pit
that straddles the border of Lakeland and West Lakeland
Township. This resulted in the overpayment of gravel tax to the
City of Lakeland, and underpayment to West Lakeland Township
and other communities that host gravel mining, including Scandia.
• The County requests that the City execute a Satisfaction and
Release agreement accepting their settlement with Lakeland for
repayment and redistribution of the gravel t�revenue. Scandia
would receive $955.21.
• For 2009 and future years, there is a new formula for distributing
gravel tax money(42.5%to the city in which the mine is located,
42.5%to the county, and 5%to the restoration fund)that should
prevent such an error from affecting Scandia in the future.
Recommendation: I recommend that the Council approve the agreement.
Attachments/ • Memo from Washington County,Aggregate Industries Gravel
Materials provided: Tax Reporting Error Adjustment
• Satisfaction and Release
Contact(s): Kevin Corbin, Washington County(651
430-6182)
Prepared by: Anne Hurlburt, Administrator
(gravel tax satisfaction and release agreement)
Page 1 of 1
08/25/09
W�L!��,�,AY ��O".� Property Records and
�r...�
IllI1�LUI1 �3� �y�, Taxpayer Services
�`�,��un� �'--� Department
�� �'E;o -=,�`,�`�
::s_,..��ir
� " Kevin Corbid
Director
Aggregate Industries Gravel Tax Reporting Error Adjustment
Background
Each aggregate mining operator in the County is required to report its activity and pay the appropriate gravel
tax each quarter. For a number of years, Aggregate Industries was reporting that the extraction from its
Lakeland Pit was occurring in the City of Lakeland. In 2008,the County was notified that the aggregate
extraction actually came from the West Lakeland Township portion of the mine. During this period,the
County distributed the gravel tax proceeds based on the information provided by Aggregate Industries and
according to the county ordinance. Because of this,the City of Lakeland received additional funds,and a
number of communities received less than they otherwise would have if the reporting had been done correctly.
The City of Lakeland and Washington County have reached an agreement for the City to repay the gravel tax
proceeds it received improperly from 2002-2007.The County can then use these funds to disperse to the cities
and townships that are eligible for additional funds from this time period.
Communities Imaacted(spreadsheet attached)
Cottage Grove,Forest Lake,Hugo,Lake Elmo, Woodbury, Baytown,Denmark,Grey Cloud Island Township,
May Township,Scandia, Stillwater Township,West Lakeland Township
Because of the county formula for distributing the 30%local share of gravel tax a number of communities are
impacted by this redistribution. Most of the funds will be paid to West Lakeland Township,but other
communities that hosted gravel operations during this period will receive additional funds.
Gravel Tax Distribudon(Law Prior to 20091
■ 60%to the County Road and Bridge Fund
■ 10%to a Pit restoration fund
■ 30%to the cities and townships based on the following formula:
0 50%is divided among all communities in the County based on the miles of road in each
community;
0 30%is divided among the communities based on the amount of aggregate removed from each
community;
0 20%is divided equally between all communities that had aggregate removed during the
reporting period(host communities).
Redistribution
As part of the City of Lakeland agreement to repay the gravel tax proceeds from 2002-2007,the City and the
County are requesting a satisfaction and release be signed by each community receiving funds that releases
each party of any further obligations related to this matter.
Govemment Center • 14949 62nd Street North—P.O. Box 6,Stiliwater, Minnesota 55082-0006
Phone: 651-430-6175 • Fax: 651-430-6178 • TTY: 651-430-6246
www.co.washington.mn.us
Equal Employment Opportunity/Affirmative Action
Adjustment to Gravel Tax distribution due to notification from Aggregate Industries that they incorrectly reported
that gravel was extracted from Lakeland, and that it was actually extracted from West Lakeland
2002-2007
2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 Grand
Munici ali 1st half 2nd half 1at half 2nd half 1st half 2nd half 1st half 2nd half 1st half 2nd half 1st half 2nd half Total
fton $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.00
Ba rt $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 50.00
Birchwood $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 �0.00
Cotta e Grove $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 $955.21
Dellwood $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.00
Forest Lake $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $60.42 $0.00 $0.00 $0.00 360.42
Grant $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Hastin s $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.00
Hu o $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 5439.97
Lake Elmo $0.00 $92.56 $0.00 $96.33 $54.56 $87.23 $57.14 $112.54 $0.00 $97.47 $0.00 $121.26 $719.09
Lakeland $2,531.95 $3,856.93 $1,980.65 $4,622.70 $2,258.04 $4,062.12 $2,301.90 $4,216.48 $2,243.14 $4,341.81 $3,373.65 $4,357.17 $40,146.54
Lakeland Shores $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.0p
Lake St Croix Beach $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 50,00
Landfall $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 �0.00
Mahtomedi $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Marine $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 30.00
New rt $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 �0.00
Oakdale $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 .00
Oak Park Hei hts $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.0p
Pine S rin s $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Sp,00
St Ma 's Point $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.00
St Paul Park $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 �0.00
Stiliwater Ci $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 a0.00
hite Bear Lake $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 50,00
illernie $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
oodbu $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 $955.21
Ba own $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $0.00 s833.95
Denmark $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 $955.21
Gre Cloud Island $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 s955.21
Ma $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 s955,21
New Scandia $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 �955.21
Stillwater Tw $51.60 $92.56 $57.69 $96.33 $54.56 $87.23 $57.14 $112.54 $60.42 $97.47 $66.41 $121.26 3955.21
est Lakeland $2,067.55 $2,931.33 $1,461.44 $3,659.40 $1,712.44 $3,189.82 $1,787.64 $3,203.62 $1,699.36 $3,464.58 $2,842.37 $3,387.09 �31 408.84
otal $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 sO.Op
SATISFACTION AND RELEASE
WHEREAS, Minnesota Statute § 298.75 (hereinafter Statute) authorizes Washington County
(hereinafter County) to impose an aggregate production tax (hereinafter Tax) on aggregate mining
operations within the County; and
WHEREAS, the County enacted the Aggregate Removal Tax Ordinance #33 (hereinafter
Ordinance)to implement the Statute; and
WHEREAS, the Statute and Ordinance allow distribution of 30 percent of the Tax collected to
towns and cities within the County; and
WHEREAS, the aforementioned distribution is based on an allocation formula devised and
implemented by the County Board; and
WHEREAS,the distribution takes into account the location of the aggregate extraction; and
WHEREAS,the Statute and Ordinance establish reporting requirements for Operators as that term is
defined in the Statute and Ordinance; and
WHEREAS,the Ordinance requires an Operator to make and file with the County Auditor a correct
report in such form and containing such information as the Auditor shall require; and
WHEREAS,two vital pieces of information the Operator is required to provide in its report are the
quantity of aggregate removed and the location of the aggregate so taken; and
WHEREAS,Aggregate Industries is an Operator conducting mining operations in the County;and
WHEREAS, during the relevant period 2002 through 2007, Aggregate Industries conducted
aggregate mining operations in its Lakeland Pit mine; and
WHEREAS, a portion of the Lakeland Pit mine is located in the City of Lakeland and a part is
located in West Lakeland Township; and
WHEREAS, during the relevant period 2002 through 2007, the reports submitted by Aggregate
Industries indicated that the aggregate taken from the Lakeland Pit mine was extracted exclusively from the
part of the mine located in the City of Lakeland; and
WHEREAS,based on the information provide by Aggregate Industries in its reports to the County
and pursuant to the County's allocation formula,the County Auditor allocated and distributed to the City of
Lakeland for the years 2002 through 2007 an additional Forty-thousand one-hundred forty-six dollars and
fifty-four cents($40,146.54)in Tax proceeds associated with the extraction of aggregate from the Lakeland
Pit mine based on the information provided by Aggregate Industries that the aggregate was removed from
the City; and �
WHEREAS,it was subsequently discovered that the aforementioned extractions did not occur in the
City of Lakeland; rather, it was determined that all the aggregate extracted from the Lakeland Pit mine
during 2002 through 2007 was taken from the West Lakeland portion of the mine; and
WHEREAS, given the corrected information that the aggregate was actually taken from West
Lakeland Township,the County Auditor deternuned through application of the Tax allocation formula that
the City of Lakeland was not entitled to certain Tax proceeds linked to aggregate extraction from Lakeland
Pit mine paid to it during the period 2002 through 2007; and
WHEREAS,a recalculation of the allocation formula using the corrected information indicated that
the City of Scandia was entitled to $ 955.21 of the Tax proceeds associated with the aggregate extraction
from Lakeland Pit mine during the period 2002 through 2007 as more fully shown by Exhibit A which is
attached hereto and incorporated herein; and
WHEREAS,the City of Lakeland wishes to return to the County Auditor for proper redistribution
all of the aforesaid amount of Tax proceeds distributed to it; and
WHEREAS,the City of Scandia agrees with the amount of the allocation to which it is entitled in
this matter, which is $ 955.21.
NOW THEREFORE,the City of Scandia accepts the payment of$955.21 in full satisfaction of the
amount owing it in the matter and releases Washington County and the City of Lakeland and their officers
and employees from any further obligations in this matter and from any actions,claims, liabilities or suits
that the City of Scandia may have or bring against Washington County or the City of Lakeland,arising from
the matters set forth in this satisfaction and release.
CITY OF SCANDIA WASHINGTON COUNTY
By By
Mayor County Board Chair
By By
City Administrator County Administrator
Approved as to form by: Approved as to form by:
City Township Attorney George Kuprian
Assistant Washington
County Attorney