Dayton sets assessment hearing for Territorial Road utility improvements, continues work on Sundance Woods

After much discussion in numerous council meetings and work sessions, Dayton City Council approved the plans and specifications for the Territorial Road/Rush Creek Road trunk utility improvements. This project would bring the potential for municipal water and sewer access to 15 properties adjacent to the proposed Sundance Wood residential development located in the southwest portion of Dayton. However, the council held off on approving a preliminary plat or developer’s agreement with Tom Dehn, developer of Sundance Woods. Due to the 60-day rule, in which the council is required to make a decision on a preliminary plat within the specified time frame, a decision of some sort will be forthcoming at the June 18 council meeting.

City attorney George Hoff said the council has options on what course of action they may choose, from denying the project, to approving the project as presented or approving with conditions that the developer can choose to accept or reject. They could also seek an extension if Dehn is willing to grant one.



Sundance Woods is a proposed residential development consisting of 192 singly family homes within to be developed in four phases. Phase one contains 42 lots. In past discussions, Dehn has agreed to pay developer’s fees on the first three phases to help subsidize the funding requirements to run the water and sewer through Territorial Road/Rush Creek Road in order to gain access within the Sundance Woods area.

Discussions at the council meeting June 11 centered around obtaining two Letters of Credit and the amount of risk each party was willing to take in order to move the project forward.

Dehn said he would be willing and able to provide a Letter of Credit for the first portion of the project; however, his bank was not interested in providing a second Letter of Credit because of the amount of funds it would tie up.

“I wouldn’t be able to go forward with the project in that case,” Dehn said. When obtaining a Letter of Credit, Dehn said it works much like taking out a loan for the developer because the bank has to make that amount of funding available should the developer default on the project. Letters of Credit provide some security for a city so they don’t get left with the financial fallout should a project go awry.

Council members discussed various options with Dehn and his representatives trying to problem-solve a way to provide security for the city since one Letter of Credit did not satisfy council members’ concerns.

Council member Rick Shermer suggest Lennar, the building contractor for the homes to be built in the first three phases, put up the extra funding on their own.

“Lennar is a big, national company,” Shermer said. “If they truly wanna do it, they will come up with it. You’re asking a lot of the council.”

Shermer wasn’t alone in his concern for the amount of risk the city is willing to take on.

“We’re having a hard time getting to yes unless we have some sort of back up to mitigate this risk,” Mayor Tim McNeil said. “We like the development, we like everything about it except the financial risk.”

Council member Eric Lucero mentioned that the council also has other financial concerns weighing on their minds such as the gap in funding that they may need to address with potential construction of an interchange at Brockton Lane.

Council directed Hoff to look into some alternatives to the second Letter of Credit such as allowing the single Letter of Credit for $1.8 million be a continuing Letter of Credit. He was also directed to look into the possiblity of elminating the additional road improvements and entrance to the development on Fernbrook Lane which was added into the project to appease the City of Maple Grove’s concerns over Territorial Road being the only access point.



City Engineer Mark Hanson presented the trunk utility improvements at a public hearing to order the plans and specifications for the project. The project provides a 30 inch diameter trunk sanitary sewer and 12 inch diameter water main in Territorial Road/Rush Creek Road east of County Road 81. Its purpose is to serve the proposed Sundance Woods development.

The project cost is estimated at $2.32 million with $331,950 to be funded through assessments. With 15 properties in the project area, each parcel would be assessed $22,130. The remaining $1.988 million would be funded through a combination of private and city funding. Sundance Woods developer fees would cover $1.426 million while $100,000 would be taken out of the city’s road fund, sewer fund and water fund for a total of $300,000. The city would then bond for the remaining $262,496.

As Hanson detailed the project, council member Lucero noted that three of the properties are not actually located on the road which will be improved. He suggested those properties should not be assessed for the road improvement costs.

The project would install 4-inch  sewer and 1-inch water stubs for sewer and water. Some of the residents requested the possibility of bumping those up to 8-inch and 4-inch respectively. Shermer asked what the cost differential would be for the upgrade. Hanson suggested a cost range from $10-15,000. However, he did not provide any official figures.

Council directed Hoff to research ways to make the assessment cost more palatable to residents through deferred assessments or some other type of funding structure.

After closing the public hearing and approving the plans and specifications, the council set an assessment hering for Tuesday, July 9. It will be held as part of the regular city council meeting that evening beginning at 7 p.m.


Contact Mindy Mateuszczyk at [email protected]