PROCEEDINGS OF THE STURGIS CITY COUNCIL – MAY 21, 2007

The Common Council of the City of Sturgis met in regular session at 7:30 p.m. on Monday May 21, 2007 at the Sturgis Community Center. Present: Mayor Maury LaRue, Aldermen Roger Call, Bernadette Usera, Tom Ferguson, Sherry Scudder, Mark Chaplin, Steve Anders and Jamie McVay. Absent: David Hersrud.

Mayor LaRue led everyone present in the Pledge of Allegiance.

Mayor LaRue made the following announcements:

a. The Kiwanis have donated $300.00 to the Scholarship Fund at the Community Center

b. The two dance recitals that were held at the community center were a big success

c. The Sturgis City Park will be the location of the Cavalry Days festivities held on June 8-9. There will also be a parade and if anyone is interested, please contact the Chamber of Commerce

d. Water Restrictions will be in effect June 15, 2007 between the hours of 9:00 a.m. and 5:00 p.m. for use of anything except hand watering. For new lawns or sod, please contact the Sturgis Water Department to obtain a waiver.

Motion by Anders, second by Chaplin and carried to approve the agenda as presented.

Motion by Call, second by Scudder and carried to approve the minutes of the May 7, 2007 meeting.

Motion by Call, second by Ferguson and carried with all members present voting yes to approve the following claims:

GENERAL FUND – A&B Business, $124.94, sup; A&B Welding, $30.83, maint; A&J Surplus, $16.00, sup; Ace Hardware, $27.75, maint; Ace Steel & Recycling, $15.66, sup; Laurie Adkins, $156.00, cc prog exp; Alltel, $1,230.43, util; Amcon Dist, $516.18, merch for resale; American Red Cross, $45.00, cc prog exp; Associated Supply Co, $605.09, sup; Atco International, $266.00, sup; Bentz Equipment, $59.60, maint; Best Business Products, $24.08, maint; BH Chemical, $23.98, sup; BH Elevator, $102.04, maint; BHP&L, $18,623.21, util; Bierschbach Equipment, $1,005.00, maint; Birdsall Sand, $191.02, sup; Campbell Supply, $200.07, maint; Ceasd, $62.00, travel; David Chick, $195.00, cc prog exp; Bill Coacher, $351.00, cc prog exp; Coca Cola, $37.50, sup; The Computer Shop, $29.95, maint; Dakota Backup, $119.94, maint; Elan-City, $2,000.43, travel; Farmers Union Oil, $3,173.44, sup; G&G Enterprises, $43.00, merch for resale; Hauff Mid-America Sports, $324.00, cc prog exp; Hills Materials, $772.81, sup; Hillyard, $162.02, sup; Jim’s Auto Salvage, $75.00, maint; Johnston Hardware, $130.12, maint; Jolly Lane Greenhouse, $21.60, sup; Locks by Bernie, $20.00, sup; Lynn’s Dakotamart, $163.89, other; Marlow White, Inc., $195.00, sup; David McCarthy, $30.00, other; Meade County Times, $449.15, publishing; Menard’s, $5.45, sup; MDU, $4,554.01, util; NAPA, $978.79, sup; Nelson Rental & Repair, $815.25, maint; Neve’s Uniforms, $5.90, sup; OReilly Auto Parts, $170.12, maint; Owens Interstate Sales, $925.87, sup; Pamida, $140.72, sup; Pete Pi, Sr, $60.00, other; Prairiewave, $232.64, util; Stuart Pummel, $200.00, maint; Rapid Delivery, $25.20, maint; Rockingtree Floral, $203.40, sup; Rushmore Communications, $38.25, sup; Rushmore Office Supplies, $734.25, sup; Sand Creek Printing, $242.50, sup; Servall Towel, $321.42, maint; Spearfish Fencing, $245.30, maint; Bernadine Steichen, $39.00, cc prog exp; Street Dept. Petty Cash, $14.96, sup; Sturgis Tire, $49.95, maint; Temperature Technology, $702.31, sup; USA Blue Book, $97.57, maint; Vanway, $116.40, other; Joey Weiland, $60.00, sup; Western Business Solutions, $395.00, maint.

PARK – Ace Hardware, $24.99, maint; Alltel, $33.52, util; Bentz Equipment, $463.96, maint; BHP&L, $18.45, util; BH.com, $18.75, prof fees; Campbell Supply, $620.54, sup; Dakota Mill & Grain, $10.00, sup; Elan-City, $66.90, sup; Farmers Union Oil, $279.65, maint; Freeman Electric, $850.00, maint; Gametime, $21.56, sup; Heartland Paper, $193.33, sup; Hills Materials, $579.65, maint; Jenner Equipment, $121.46, maint; Johnston Hardware, $34.98, maint; Lynn’s Dakotamart, $9.98, sup; Menard’s, $31.92, sup; MDU, $58.20, util; NAPA, $149.39, sup; Newman Traffic Signs, $1,262.40, sup; Northwest Pipe Fittings, $1,170.50, sup; OReilly Auto Parts, $22.68, sup; Owens Interstate, $21.47, maint; Pamida, $161.88, maint; Poly John, $101.39, maint; Powerhouse, $147.12, sup; Prairiewave, $132.22, util; Rockingtree Landscapes, $181.48, sup; RPM Machine Shop, $27.00, maint; Rushmore Office Supplies, $221.84, sup; SD Federal Property Agency, $50.00, maint; Town-n-Country Plumbing, $330.30, sup; Twilight First Aid & Safety, $232.81, sup.

BRICK PROJECT FUND – Epic Outdoor Advertising, $2,578.00, city promotion; Glover Investments, $1,400.00, publishing.

LIBRARY BUILDING FUND – Elan-City, $365.16, library furnishing.

AMBULANCE SERVICE – Alltel, $52.24, util; Dakota Backup, $12.49, prof fees; DB Billing Co, $1,067.00, prof fees; Farmers Union Oil, $775.20, sup; Farmers Union-Union Center, $33.40, sup; Great Western Tire, $50.00, maint; Johnston Hardware, $7.19, sup; Paul Young, $86.38, ambulance charges.

CAPITAL IMPROVEMENT – Hills Materials, $70.69, cap imp; Meade Co Auditor, $2,837.93, principal; SD Dept of Transportation, $199.68, cap imp.

2003 SERIES REVENUE BOND – Rural Development, $8,739.00, principal.

RURAL DEVELOPMENT-CITY HALL 2 – Rural Development, $8,958.00, principal.

COMMUNITY PROJECTS – Muth Electric, $23,481.60, cap imp.

LIQUOR – BHP&L, $854.88, util; Freeman Electric, $99.94, maint; Johnson Western Wholesale, $7,820.57, off sale liquor; Johnston Hardware, $20.99, maint; Lynn’s Dakotamart, $88.00, merch for resale; MDU, $23.72, util; Nash Finch, $30.00, other; One Way Service Pros, $411.10, maint; Pepsi Cola, $146.50, pop for resale; Rushmore Office Supplies, $432.81, sup; Servall, 93.02, maint; Wells Fargo Merchant Services, $7.50, other.

WATER SYSTEM OPERATIONS – Alltel, $457.42, util; BHP&L, $857.83, util; Prairiewave, $79.06, util.

WASTEWATER FACILITIES – Alltel, $134.08, util; BHP&L, $10.00, util; Campbell Supply, $141.92, sup; Great Western Tire, $150.99, maint; Hills Materials, $123.91, maint; Verizon, $44.69, util.

SANITARY SERVICE – A&B Welding, $30.83, maint; A&J Surplus, $85.40, sup; ALLTEL, $50.23, util; Butler Machinery, $6.86, maint; Campbell Supply, $12.50, sup; Lynn’s Dakotamart, $65.18, sup; NAPA, $258.60, maint; Owens Interstate Sales, $172.96, maint; Rapid Delivery, $18.00, maint; Sanitation Products, $1,196.75, maint; West River International, $83.88, maint.

RALLY – Alltel, $1,035.10, sup; Elan-City, $1,322.28, sup; Tyler Lamphere, $250.00, group ins; Meade Co Times, $741.83, publishing; Officemax Contract, $41.92, sup; Outsource Solutions, $6,475.00, prof fees; party Time Plus, $349.50, sup; V-Twin Expo, $1,950.00, travel.

This was the designated time for committee reports:

v Public Safety Committee--Scudder reported that items discussed were the Shooting Range and improvements; Mustang Rally parade is scheduled for August 31^st and will start at Kick Start and proceed through downtown; Discussion was held concerning children’s safety in the area of the ball fields with cars being parked on Ballpark Road. This will also be discussed with Public Works and again at Public Safety. One suggestion was to not allow cars to park on Ballpark Road. One item that will be referred to council is blocking off a small portion of the east side of First Street for the Arts Center presentation May 25, 2007. The Public Safety Committee meets the second Tuesday of every month at 5:00 at the Law Enforcement Center.

v Public Works Committee—Call reported that Terry Sharkey is putting a retaining wall by the car wash on Lazelle Street to keep people off the grass and Sharkey does understand that he cannot vend in this area. The Yamaha signage was tabled because no one was there to represent that request. Alltel presented a request to put up an Alltel radio tower at the sewer lagoons. This is being presented to the attorneys before any action will be taken. Donna Fedderson appeared before the Public Works Committee to discuss a drainage issue. This will be looked at and discussed at the next committee meeting. The next meeting is scheduled for June 4 at 6:00 p.m. at the Public Works building.

v Community Center Committee—McVay stated that they had not met yet but their meeting is scheduled for June 7 at 7:00 a.m. at the Community Center.

v Liquor Committee—Ferguson reported that the Liquor Store will be starting their summer hours which are 8:00 a.m. to 10:00 p.m. Monday through Saturday and Sunday hours are 10:00 a.m. to 7:00 p.m. The next meeting is scheduled for June 13^th.

v Park Board—Gene Stock reported that they are applying for a LWCF Grant for lighting at the soccer field. The Park Board had also received a request for use of the skateboard park during the motorcycle rally. The Park Board meets the second Tuesday after the first Monday of the month at 7:00 p.m. at the Morman Law Firm.

v Legal & Finance—Chaplin reported that a few minor details had been discussed and no date has been set for the next committee meeting.

v Rally Committee—Scudder reported that the Flat Track presentation was presented by Scott Jensen and Todd Berry. They requested that the city sponsor the 2007 AMA Grand National August 7, 2007 in the amount of $10,000-$15,000. This presents a budget issue; but sponsorships may be involved and the committee will try to work with them. The Brick Project was discussed and since sales were down from last year they are looking at having an outside non-profit solicitor for the brick sales during the rally. The Freedom Ride is being held May 25-27, 2007. A list of events can be found listed on the Chamber of Commerce website. Committee meetings are held second and fourth Thursdays at 7:00 p.m. in the upstairs meeting room at City Hall.

v Library Board—Usera reported that in visiting with Library Director Moore that the Grand Opening of the Library was successful and the summer reading program will kick off the end of May. Also scheduled this summer is a teen reading program. The Friends of the Library are having their annual meeting June 7^th at 7:00 p.m. at the City Auditorium. The Friends of the Library are also having a Book Sale in conjunction with Cavalry Days and they are encouraging everyone to bring books for this fundraiser for the library.

v Governmental Change Committee—Chaplin reported that at their first meeting the number of committee members were decided; how to advertise for the City Manager; where they are going to advertise; interview questions and laying the groundwork for future meetings. This committee will meet on May 25^th at 7:00 a.m.

Motion by Anders, second by Chaplin and carried with all members present voting yes to appoint Suzanne Dardis as temporary Deputy City Attorney.

Motion by Anders, second by Chaplin and carried to adjourn to executive session for the purpose of discussing legal matters.

Motion by Chaplin, second by Call and carried to return to regular session.

Motion by Chaplin, second by Anders to go out of general council and adjourn to the Board of Appeals.

This was the time set upon application for a public hearing for Thad Olson to appeal the refusal to renew his contractor license.

Scott Rovere, Building Inspector presented the following evidence which lead to the refusal to renew Mr. Olson’s license.

Ø Public perception from home owners in the Vernon Heights area was one of the major deciding factors along with inspection issues.

o Guy Edwards, 10 Belair Circle, had the center wall between himself and 16 Belair Circle fall away from the foundation. The front door also did not have insulation.

o Dean McNenny, 16 Belair Circle, foundation problems starting in 2005. Retaining wall, which supports part of the stairway leading to the downstairs area, was pulling away from steps. Rear pad on the east side of the home was also falling. In early 2006 McNenny found sewer gas coming into the house, which was the result of a sewer line cut off flush with the concrete basement floor. State Inspectors were called in and their findings also included the upstairs sewer line not properly installed. The summer of 2006 Mr. McNenny hired Denver Grouting to mud jack his house at the expense of $50,000 and without seeing the house moved at all. McNenny found a leak in the sprinkler system. The plumber that installed this system was not licensed in the State of South Dakota or within the City of Sturgis. Building Inspector Rovere presented pictures of this structure.

o Lawrence Bride. 50 Belair Circle, no framework or final inspections.

o Volmer Jensen, 56 Belair Circle, no framework inspection. Mr. Jensen signed a waiver for the framework, which was not done. Rovere was aware of a dispute on the closing cost between Mr. Jensen and Mr. Olson. Garage did not have any insulation installed and no punch list was completed. Jensen and Olson had a bridge of arbitration done with a judge with closing taking place in March of 2006 at which time Rovere did an inspection.

o Dennis Jensen, 70 Belair Circle, had sidewalk pulling away from house due to poor compaction. Attic also had snow in it causing water dripping through the ceiling.

o Larry and Nancy Carpenter, 86 Belair Circle—had foundation problems leading Carpenter’s to also hire Denver Grouting to mud jack their home at approximately $40,000. Their home was dropping vertically as well as horizontally moving down the hill. Also had sidewalks replaced; had the supporting soil compacted and sidewalk fell again. Carpenter’s now have a Hardy Plank style deck. Rovere was called to this home in the summer of 2006 because a drain was not working in the garage. The sewer line was found to be crushed leading them to discover a 5-6” space underneath the foundation of the garage with no compaction. Retaining wall had no weep holes or drain tiles installed causing wall to push away. Mrs. Carpenter informed Rovere that their neighbors Bob and Betty Chihak are not having any trouble with settling because Short Brothers Construction had done the compaction on the Chihak side; they were supposed to do the Carpenter side also but because of the price of their work, Thad Olson Construction decided not to use them because they could do it cheaper themselves.

o Sturgis Water Department informed Rovere of a problem with a curb box that was bent and not replaced at Dolan Creek Road. Mike Strain, Palisades Addition, had a sewer line installed by Mr. Olson’s company that ran Dolan Creek Road through the creek bottom and up to the Palisades Addition. Public Works Director Nohava informed Rovere that Mr. Olson was not on this job when it was being done and none of his crew were licensed to install a sewer line. It was during this time that the crew ran over the curb box. The Water Department has never been able to get in touch with Mr. Olson concerning this issue.

o The City has a light pole at the corner of Dolan Creek Road and Moose Drive that received damage from the Olson crew. Mr. Olson refused to fix it because he felt the light pole was in the wrong place.

o Rovere had someone call him stating that Mr. Olson had outstanding mechanic liens and state excise tax liens. The State gave Rovere figures and he verified these numbers at the Meade County Courthouse which were in excess of $47,000.00. Also mechanical liens through private individuals pertaining to houses being built in the Vernon Heights area in excess of $126,000.

Scudder questioned Rovere if Mr. Olson had a time frame as to get warranty work done.

Rovere does not know of any ordinance that lists a time frame; but that is the standard time frame of a year for warranty work.

Scudder questioned if Olson had done any of that work.

Rovere stated not in these instances.

Chaplin questioned the length of time Rovere had been the Building Inspector.

Rovere responded two years and a month.

Chaplin asked if during that time the Inspection Department had had a lot of complaints as a whole.

Rovere stated that the complaints have only been with this situation.

Chaplin questioned a statement by Rovere concerning the deck at the McNenny house as being unusable.

Rovere responded that McNenny had hired a private architect to come and do an evaluation of his home. Through the findings of the architect, they found that for the size of the deck and what McNenny had planned on using it for, the deck was unusable.

Chaplin questioned if the foundation problem had been caused by the sprinkler system.

Rovere stated that he could not answer that question. McNenny had a quarry company come in and do actual core testing; the core sample was about 91%, which is about what Sturgis soil is. The City requires a 95% at this time. At the 18’ line, they found vegetation, which means that when fill was put in, the top soil was not removed which allows adhesion between the old and new soil.

Chaplin asked if Rovere knew how much McNenny has spent in trying to correct this problem.

Rovere responded that the only amount he knows is the $50,000 spent on mud jacking.

Chaplin stated that Rovere alluded to the fact that the Short Construction compaction side does not have any problems but the other side does.

Rovere agreed with this statement.

Chaplin questioned if any other contractors houses have split.

Rovere stated he did not know since they were not up there watching them on a day to day basis. Rovere also stated that the Carpenter house and the McNenny house compaction happened prior to his being the Building Inspector.

Chaplin asked if Rovere had any other complaints from that area with other contractors.

Rovere has not had anyone contact him saying they were having a problem.

Anders questioned Rovere if he had any idea what the curb box cost was.

Water Superintendent Christians answered that the estimated cost was $15.00.

Anders asked if there would also be equipment charges.

Christians stated he didn’t think a backhoe was needed.

Rovere wanted the council to know that this information was presented to him so he didn’t have to do a lot of investigation to find it.

Chaplin questioned Rovere about the $47,000 lien if it was sales tax or excise tax.

Rovere stated that the figure was a combination of three liens.

Usera asked what mechanical liens were.

Rovere responded that it would be a lien put on because a subcontractor or someone who had done work for the contractor had not been paid. Rovere also stated that he had a couple of liens from employees.

Scudder questioned that with the closing cost, did Olson not give change orders.

Rovere stated that was correct and that it was his understanding at the time of closing the construction company asked for more money and could not come up with a break down as to the raise in cost. Rovere is aware that there was a difference in interest rate paid when the contact was set to be closed and when it was actually closed

Volmer Jensen, 56 Belair Circle, addressed the council that it was his home that Rovere referred to with the closing costs and the dispute he had with the contractor. They did have a signed contract prior to entering into the construction of the home. It was not a fixed price contract except for certain items like carpeting; counter tops and things like that. When the house was almost finished they tried to reach a conclusion as to the final price and that meeting did not go well. Mr. Olson had not treated them well. Insulting and disparaging remarks were made accusing them of having bad faith in Olson and trying to take advantage of him. His demand later was for a significant increase than what was originally agreed on. To finally get it settled they went through voluntary binding arbitration. This was started in October and December 19th was the arbitration session with the judge. His decision was on the 21^st of December, a price was set along with the closing date of December 28^th. Mr. Olson refused to sign the documents that would allow that to take place. March 27^th was when they finally closed on the house. Before the price could be decided by the arbitrator, Jensen lost his loan at a very favorable interest rate. The loan goes for 30 years and will cost him $22,000 more in payments for the loss of the previous loan. The punch list contained several items and that was given to Mr. Olson in December; he did a couple of the minor items but still did not complete it. The insulation in the garage, trim work and paint touch ups were not done. Jensen would recommend that the council deny the contractor license for Thad Olson.

Marcia Johnston, Johnston Hardware, stated that Thad Olson Construction had an account with them. For awhile everything went good, they received payments on time and then they started to get slow over time. Johnston would call Olson and leave messages. Johnston would finally get a payment. Then after awhile she received nothing; she would continue to call three different phone numbers asking Olson to please contact her to try to work something out. Finally Johnston left a message that if Olson did not contact her she would take legal action. Olson finally came into the store and stated that he was doing a closing in a couple of week and he would get her $1,000.00 by that time. That never happened. Johnston waited two more weeks to give him one more chance and filed against him. When the judgment was given in Johnston Hardware’s favor, she took judgment to the Meade County Sheriff’s Department and asked them to execute it. At that time, the Sheriff’s Department had several ahead of Johnston’s and basically it all came back that there was nothing they could do. Johnston’s were later contacted by Wells Fargo Bank stating that due to the judgments against Olson, they were trying to refinance a loan but since the entities that had judgments against Olson would take $.50 on the dollar and everyone agreed, then Johnston’s would get that much. At the advice from Johnston’s attorney, they decided to do that. Johnston stated they were a small business and they try to give good service; they extend credit to customers knowing it takes them awhile to get their money back. Johnston’s Hardware lost approximately $2,500.00 so they would ask the council to deny Thad Olson’s application for a contractor’s license.

Larry Bride, 50 Belaire Circle, appeared before the council and stated that he has had to redo most of the work. They have had water backup because the construction crew swept sawdust into the drain and did not clean it out. Bride has had problems with the garage door along with the guest room door that didn’t get changed out. Also the deck was never finished. Bride would recommend the city council not renew Olson’s contract license.

Thad Olson took this time to respond to the above allegations. Olson responded first to Rovere’s comments. Most of the things that were brought up were inspection issues that were part of the perception issues. Olson questioned what record the City has of the past dealing in contract issues or homeowner’s contractor issues or anything other than inspection. Olson brought this question up at the appeal and has not received an answer.

Deputy City Attorney Suzanne Dardis stated that at this session it is a fact finding procedure and to allow Olson the opportunity to respond to the allegations made against him.

Olson stated that on Guy Edwards’ allegation of the center wall settling he had not received any notice from the city nor Guy Edwards concerning this issue.

Olson responded to the McNenny allegations that Dean McNenny installed the sprinkler system himself after Olson advised the plumber and the sprinkler guy that they were not to install because Olson had ran the sprinkler line out behind the house because in a walk out basement that is common procedure because it is not whether it will leak but when it will leak. With plastic lines and a plastic box, they will all leak. Olson told McNenny not to install it where he did but he went ahead and did it and it leaked. It leaked for 21 days underneath his home from the line McNenny installed and basically popped the top off the retaining wall. By looking at the water meter, it was leaking 2 gallons every half hour for 21 days. Olson asked that in the council’s review they calculate the numbers of gallons that McNenny pumped underneath his house. Olson stated in his opinion that McNenny was lucky he just destroyed what little of his home that he did and didn’t do more damage to his neighbor’s house.

Olson stated that he is insured for one million dollars; every one of these homeowners has the opportunity to come after it. They have a million dollars of liability insurance at their disposal if it is found that Olson did anything wrong and that is the reason the City requires this insurance. After reviewing Mr. McNenny’s project the insurance company stated that they thought it was his fault and denied his claim. Olson has not heard any more from McNenny or the City of Sturgis. Olson stated that the McNenny deck was built according to code just like any deck in Vernon Heights that he built and he was never issued any inspection citation from anyone. Olson was bad mouthed about the way he built the deck from an architect that Dean McNenny himself hired. That is the only person that has anything derogatory to say about it that has any knowledge. This deck was not built to have a hundred people on it but a private residence; you don’t build a deck the same way you would build a deck at One Eyed Jack’s. Olson objects to anyone saying that this deck was not built according to code. Olson would love to see the receipt showing that Mr. McNenny paid Denver Grouting $50,000.00. Olson requested that this item be factual.

Olson responded to 50 Belaire Circle, Mr Bride, that as far as framing inspection, Olson did not receive any notice. This is being brought up over a year later. Olson applied for a building permit and the City brings up something over a year ago. In the fall of 2005, Olson received notice that the City did not have or had lost over 14 building inspections of his building inspections. Olson went through and did them all again with the exception of one. That one was for Dean McNenny and Dean McNenny was there at the time that the inspection was done. Olson called McNenny and reminded McNenny that he was there and then all of a sudden that one was found.

Olson stated that on Volmer Jensen, Jensen was ordered by federal arbitrator, Marshall Young, as per the arbitration agreement you do exactly as the arbitrator tells you to do. Before you can close on a property, the owner still has to sign a purchase agreement. Mr. Jensen refused to sign the purchase agreement with attaching two pages of extras and punch list that he wanted added to the purchase agreement. Olson called Judge Marshall Young and told him what Jensen wanted to attach to the arbitration agreement. If this goes to court, Olson wondered who would win. Olson stated that Young said his arbitration agreement is as it is. What it says is the only thing Olson had to do; not anything added. They closed at exactly what the arbitration agreement stated. This issue should not be before the city council. Olson stated that he should not have to explain himself for doing what a federal judge ordered him to do. If Olson had not done what was ordered; then he would have been in violation of the order and would have suffered criminal consequences; as would Mr. Jensen had he not obeyed the order.

Olson responded to the Dennis Jensen claim of sidewalk settling; every piece of concrete Olson has ever poured has settled. Anyone who says that concrete doesn’t settle is a liar. Concrete gets hard, cracks and settles.

Olson stated that he has done things that aren’t perfect but very few people have. For ten prior years, Olson has held a contractor’s license in the City of Sturgis and was never issued a citation; never called before a board; no hearing; nobody complained to the City until Vernon Heights and everyone one of them are on that draw. Every issue the city has had is on that one particular draw.

Olson informed the council that on June 28 and 29, 2007 there is a jury trial with Larry and Nancy Carpenter. Olson did not want to comment on this issue until the trial is complete. Olson appealed to the city council to wait to make your decision until you see the outcome of this trial. Olson stated that it is the middle of summer now and if you haven’t had houses bid by now; you don’t pour concrete in the winter time. If you can’t bid them now, your summer is gone and Olson has waited this long.

The City of Sturgis Water Department issues, Olson stated that 14 months after the fact he is now finding out. The city said they called him but Olson never received a call. Ron Merwin owns this property and Ron did not know anything about the curb box. The people living in the house did not know anything about curb box. The neighbors across the street didn’t know anything about it either. Olson received no notice of this until his contractor’s license was denied. It has not been common practice of the City of Sturgis to operate this way but maybe it is some new procedure that Olson is not aware of.

Olson stated that on the outstanding mechanics liens, Olson has a duplex that is done but not sold that is worth $400,000.00. Olson questioned if there is a $126,000 mechanic lien against a house that is not sold an issue. Olson questioned if that was something the City decides.

Olson responded as far as Hardware Hank is concerned they said they would take the check and that released the lien. Olson bought thousands and thousands of dollars of materials from Hardware Hank. Olson questioned Johnston’s if they knew how many thousands of dollars he purchased in 2005; forty or fifty thousand.

Johnston’s responded no, not even close to that.

Olson stated that Bride’s installed his own sprinkler system. Just down the street, there are the Brandt’s, Greta Nelson, Maxine Nelson, Bob & Betty Chihak’s and they are still using the same guy who installed their sprinkler. He blows them out in the fall and starts them up in the spring. Olson did not install the sprinkler systems. Olson questioned why he was getting the black mark. As far as the change order that Bride brought up, Olson didn’t want to respond to this at this time either. Olson needs more information before he responds. Olson sent a letter of appeal with some questions that have, Olson believes not been answered. When Rovere first called Olson to tell him that his license had been denied, Olson questioned why and Rovere responded that he wasn’t sure; that he would have to ask them. Olson questioned who “them” are. Olson wants to know who “them” are.

Mayor LaRue asked if anyone had any questions for Mr. Olson.

Councilman Anders asked that Olson address the excise tax or the state tax liens.

Olson responded that the state tax lien has to do with the fair market value of a lot when you sell it. The State and Olson have different opinions on this issue. Olson explained that when you sell a piece of property and you buy a lot; as an example when Olson purchased these lots, he divided them into two he paid $36,000 a piece for them and then chopped them in two. By the time Olson chopped them in two and resold them, he sold anywhere from $25,000 to $36,000 per site. The State says that Olson did not have to pay excise tax on the fair market of the lot as you valued it in the contract. Olson valued the lot of what he sold them for; the state says that you can’t do that; you can only value them at the $18,000 of the original purchase. Olson says that it is what you sell it for; that is what fair market value is; established by what the market can bear. Olson is now going through an appeal, which could possibly go on for another year and a half or two years. Olson stated that the State has not pulled his excise tax license; he still files every month and still pays excise tax; thousands and thousands of dollars in excise tax; Olson pays approximately $8,000-$10,000 every month. According to the State, Olson owes $47,000 in excise tax but according to Olson he doesn’t.

Anders questioned if Olson held any contractor’s licenses in the surrounding area such as Spearfish, Belle Fourche or Rapid City.

Olson responded he is licensed in Spearfish. In Rapid City, he only does commercial work and they do not require a contractor’s license for commercial work. Olson stated he still has his State water and sewer installers’ license. Olson also stated that he had not been written up by the State Plumbing Inspector or the water or sewer board.

Councilman Chaplin questioned if Olson owed anyone back wages.

Olson responded that he did not, but he is still making payments to the U.S. Department of Labor. Olson has over 40 employees and at times they had borrowed money from him and Olson let them work it off at straight time. Olson paid time and one half if he told them they had to work it but if you needed money to make your house payment, car payment or keep out of jail, he loaned them the money and let them work it off on the weekend at straight time. Someone turned Olson in to the Department of Labor and the Department of Labor came and audited Olson. Everything was fine except where he loaned employees money for all these years. Olson should have been paying them time and one half even though they were working off that money to pay off their debt. Now Olson has to pay 50% interest because he loaned his employees money. Olson has paid over half of that money to the Department of Labor.

Chaplin stated that it was alluded to earlier that your plumber wasn’t licensed. Chaplin asked if Olson could verify that he was.

Olson responded that he didn’t know which plumber Chaplin is talking about. Olson stated that the plumber at Dean McNenny’s got his license pulled. Olson also stated that he had fired that particular plumber. Olson stated that he had filed a complaint against this plumber with the State Plumbing Commission. Morman Law Firm represented this plumber in trying to retrieve some of the money that Olson wouldn’t pay because of problems. John Hughes could possibly give more information of this plumber.

Chaplin questioned if it was the plumber or the sprinkler person.

Olson responded that it was the plumber that had his license pulled.

Chaplin asked when this plumber’s license was pulled.

Olson responded that it was the fall of 2005.

Chaplin questioned if that was while he was working on that house.

Olson said shortly thereafter.

Anders questioned if that was before or after Olson let him go.

Olson responded that it was after.

Anders requested that the City obtain documentation from the State Plumbing Commission.

Olson agreed.

Councilman Call questioned if Olson usually gave a one year warranty when they are complete.

Olson stated that he did unless there is a lawsuit filed and then everything is decided in the court.

Call questioned Olson if he did not install the sprinkler system at Dean McNenny’s house.

Olson stated that a subcontractor did and Dean installed the line underneath his house that leaked.

Chaplin questioned how many gallons were leaking.

Olson stated that 2 gallons per half hour for 21 days.

Olson requested the city look at the soil reports from the early development of Vernon Heights to see what happen to that soil. Some of the bore tests said there was 25% water in the soil. If you take a 5 gallon bucket of soil and add 25% more water to it and set a concrete block on it, the block will sink in about 3 inches. Olson would like that taken into account and where that water came from. Olson questioned if that would make a foundation settle.

Mayor LaRue questioned if Olson runs soil test before he places a foundation.

Olson stated he did not.

LaRue questioned why he did not.

Olson stated it was common practice; that he was not aware of any contractors that do.

Olson questioned if someone has a soil sample here in town, but he would say that less than 80% has ever ran a soil sample in the City of Sturgis.

LaRue questioned how much top soil does Olson skin before starting foundation work.

Olson responded that all of it beneath the house.

LaRue asked if Olson had any idea why they came up with vegetation when they drilled the core.

Olson stated that because they drilled the core outside of the house. The core from within the house did not show vegetation.

LaRue questioned that the core was from outside the house and not from anywhere Olson had prepared for the house or retaining wall.

Olson stated that the retaining wall would sit outside of where they took the core sample.

LaRue questioned if the retaining wall is important to the structural integrity to the sidewall that it supports.

Olson responded that it depends on where it is at.

LaRue questioned if there was a slope and the foundation is in one place and retaining wall is near, to help to support the foundation; would it not be important that the subsoil be scraped prior to retaining wall put in to help support the foundation of the house.

Olson questioned how much vegetation was found in the core sample.

LaRue stated he did not know; that he was just asking a question.

Olson stated that according to the ordinance Olson is supposed to have a hearing before the board and the City Council is the board. Olson asked LaRue if that is how he understands the ordinance.

LaRue questioned if it was the Board of Appeal.

Olson responded that it was correct. Olson questioned that if LaRue is acting as the mayor and not the City Council.

Anders stated that LaRue is acting as the Mayor and Anders acting as the City Council, acting as the Board of Appeals, will then ask the question would that not be important for that retaining wall to support that part of foundation.

Olson responded absolutely but was there any proof that it wasn’t removed. Olson again questioned the type of vegetation that they found.

Call stated that in review, that Olson does not want the City Council to make a decision on this until after your jury trial in June 28^th and 29^th; that it would be alright to wait until July before the City gives you an answer.

Olson responded that was correct.

Deputy City Attorney Dardis questioned Olson if he was aware that according to the ordinance, the procedure that the City has 40 days to provide you with an answer. Dardis asked if Olson was waiving that.

Olson stated that if the City would rather make the decision sooner.

Dardis stated that the 40 days would run on out June 29^th.

Olson responded that it was up to the City Council.

Dardis responded that no; that it is up to Olson because if Olson asked the City to wait until after the jury trial.

Olson stated his only consideration was then where does he go. How much longer would it be before he knows the answer; would it be next year.

Dardis responded that she would not speculate on that. Dardis stated the question is, is Olson waiving the 40 days or does Olson want the City to respond within the 40 days.

Olson responded he would like the decision within the 40 days. Olson reiterated that once again, he does not feel that it is the City’s responsibility to be involved in the homeowner/contractor dispute. Olson feels that the City is opening a can of worms that will not be able to be shut. The legal fees will be enormous.

Motion by Anders, second by Chaplin and carried to reconvene as City Council.

Motion by Call, second by Chaplin and carried to authorize Mayor LaRue to sign the Non Profit/Governmental Subdivision renewal application, which is a standard state licensing.

Motion by Chaplin, second by Anders and carried to authorize Mayor LaRue to sign hangar lease agreements with Darrel Sauder and Lee Alley, effective June 1, 2007 through December 31, 2007.

Motion by Anders, second by Scudder and carried to authorize the South Dakota National Guard to place directional signage at the corner of Junction Avenue and Lazelle Street June 13-15 and July 25-27 during their Land Navigation exercise this summer.

Scudder introduced the following written resolution and moved its adoption:

RESOLUTION 2007-18

WHEREAS the United States of America and the State of South Dakota have authorized the making of grants from the Land and Water Conservation Fund (LWCF) to public bodies to aid in financing the acquisition and/or construction of specific public outdoor recreation projects;

NOW THEREFORE BE IT RESOLVED:

1. That Mayor Maurice LaRue is hereby authorized to execute and file an application of behalf of the City of Sturgis with the National Park Service, U.S. Department of the Interior, through the State of South Dakota, Department of Game, Fish, and Parks, Division of Parks and Recreation, for an LWCF grant to aid financing the Sturgis Soccer Field Lighting Project for the City of Sturgis, South Dakota and its Environs.

2. That Maurice LaRue, Mayor of the City of Sturgis, is hereby authorized and directed to furnish such information as the above mentioned federal and/or state agencies may reasonably request in connection with the application which is hereby authorized to be filed.

3. That the City of Sturgis shall provide a minimum of 50% of the total cost of the project; and will assume all responsibility in the operation and maintenance of the project upon completion of construction, for the reasonable life expectancy of the facility.

4. That the City of Sturgis shall dedicate for park and recreation purposes in perpetuity, the real property identified in the authorized application.

Dated this 21st day of May, 2007.

Chaplin duly seconded the motion for the adoption of the foregoing resolution. All those present voted yes and the resolution was declared passed and adopted.

Motion by Chaplin, second by Scudder and carried with all members present voting yes to authorize Mayor LaRue to sign CDBG close out on the library project.

Motion by Chaplin, second by Ferguson and carried to approve the 2007 raffle request for the Meade County Senior Citizens.

Motion by Ferguson, second by Usera and carried to approve the 2007 raffle request from Dakota Baptist Convention.

Motion by Anders, second by Call and carried with Usera voting no to approve the 2007 raffle request from the Serenity House of Volusia, Inc.

Motion by Ferguson, second by Chaplin with Call abstaining to set a public hearing date of June 4, 2007 for the following malt beverage license renewals for the period of July 1, 2007 – June 30, 2008:

Package (off-sale)

1. Pamida Store Operating Co., LLC – Pamida, 2105 Lazelle
2. Rick & Brandy Jacobs – The Rev Limit, 1412 Junction Ave
3. Lynn’s Discount Foods, Inc – Lynn’s Dakotamart Sturgis, 1111 Lazelle
4. Nash Enterprises Inc – Kwik Mart, 2217 Junction Ave
5. Fresh Start Convenience Stores, Inc – Fresh Start Sturgis, 2620 Lazelle
6. Fresh Start Convenience Stores, Inc – Fresh Start Sturgis Conoco, 2350 Lazelle
7. Moyle Petroleum Co – Common Cents Food Store, 2421 Junction Ave
8. MG Oil Co – Amoco #6, 990 Lazelle
9. Kan-Meyer Inc – Grocery Mart, 2216 Junction
10. Farmers Union Oil Co – Cenex C-Store, 2030 Lazelle
11. Country Stores, Inc – BJ’s Country Store, 2640 Lazelle St 1
12. Mount Rodney RV Park LLC – Mount Rodney RV Park, 626 Second St

Retail (on-off) Sale

a. Dennis Lovold & Paul Ullerich LLP – Original World Famous Road Kill Café, 1333 Main St

b. Junction Avenue Property LLC – Sturgis Rider Café, 1025 Junction Ave

c. Sturgis Events LLC – Sturgis Events, 1231 Lazelle

d. Lybeck’s Twenty-First Century Inc – Shenanigan’s Casino, 935 Main St

e. Big Al’s Swap Shop Inc – Big Al’s, 1123 Main St

f. Key City Enterprises LLC – Key City Enterprises, 1111 Main St

g. USA Chopper, LLC—Wrigley Field Casino, 2695 Lazelle St.

h. Ace of Diamonds, Inc – Ace of Diamonds, 2715 Lazelle Suite D

i. Days End Campground Inc – Days End Campground, 2501 Avalanche Rd

j. Mike & Nancy Bachand – Mike’s Place, 1337 Main St

k. Rally Events Inc – REI, 1337 Main St

l. Jim Mason – Gold Pan Pizza, 1133 Main St

m. Norma Weyer – Poker Alice Casino, Lot A of Lot X-1 of Lot X, Schnell’s Addition, 850 sq ft on SE corner of Building located on the above described lot

n. Schmid Investments-Side Hack Saloon LLC – Sidehack Saloon, 1027 Lazelle

o. Dungeon Bar, Inc – Royal Flush Casino & Sport Bar, 1030 Main St

p. Buffalo Bills Corp – Buffalo Bill’s Casino, 1544 Lazelle

q. Jesseph and Bartels, LLC – Jambonz, 2214 Junction Ave

r. Billy & Jason Fields – Rosco’z, 976 Lazelle

s. Black Hills Pizza Hut of Sturgis – Pizza Hut of Sturgis, 2249 Lazelle

t. Mounib Aoun – 1321 Main St

u. Clayettna, Inc. dba Pizza Ranch, 2711 Lazelle Street

Motion by Chaplin, second by Anders with Call abstaining to set a Public Hearing Date of June 4, 2007 for Retail (on-sale) Malt Beverage Licenses Transfer from USA Chopper LLC – Wrigley Field Casino, 2695 Lazelle to Boulder Canyon Bar & Grill LLC, 2695 Lazelle.

Motion by Chaplin, second by Scudder and carried with everyone present voting yes to approve the purchase of five additional flag poles ($3,750) for the Freedom Memorial to be paid out of Parks Budget and reimbursed by the Freedom Memorial Committee.

Motion by Chaplin, second by Ferguson and carried to approve the Mayoral appointment of Area Transportation Committee as follows: DeWayne Hayes, Maxine Strand, Mildred Fried, John Johnson, Nancy Worth, Ruth Lettau, Sherry Scudder and Mike Kayras.

Motion by Ferguson, second by Anders and carried to approve the Mayoral appointment of Forestry Board as follows: Dean Rasmussen, Bev Maples, Bill McKee and Mark Chaplin.

Mayor LaRue clarified that Randy Nohava’s official position is Public Works Director not Public Works Administrator as previously stated.

Motion by Chaplin, second by Scudder and carried with all members present voting yes to approve the following new hires: a. Kimberly Baldwin—Parks, $6.00/hr, effective 5/22/07 b. Shari Biers—CC Tennis Instructor, $6.25/hr, effective 5/26/07

Motion by Chaplin, second by Ferguson and carried with all members present voting yes to approve the following wage adjustments: a. Samantha Bartels-- CC Front Desk, $.25/hr increase to $6.75/hr, effective 4-26-07 b. Adam Hosch,--CC Front Desk, $.25/hr increase to $6.75/hr, effective 4-26-07

Motion by Chaplin, second by Ferguson and carried with all members present voting yes to approve the following volunteer: Justin Stiefvater—Parks Department, effective 5/11/07.